tag:blog.alchemistaccelerator.com,2013:/posts Alchemist Accelerator Blog 2019-06-13T16:00:02Z Alchemist Accelerator tag:blog.alchemistaccelerator.com,2013:Post/1416634 2019-06-13T16:00:02Z 2019-06-13T16:00:02Z “From the Courtroom to the Conference Room” An interview with Mike Burshteyn, CEO, CryptoMove

As CryptoMove's Founder & CEO, Mike Burshteyn drives all company business strategy and execution. Before starting CryptoMove with his father, Boris, Mike was a cybercrime and data protection attorney. At Perkins Coie he worked with leading technology companies like Google, Uber, Amazon, and Microsoft, as well as startups in hypergrowth, on data privacy, security, intellectual property, and computer crimes. Mike was the #1 ranked college debater in America at UC Berkeley.

What does CryptoMove bring to the marketplace?

CryptoMove protects data with continuous fragmentation and moving target defense. Current data protection methods leave sensitive data, keys, and secrets as an easy stationary target at rest. CryptoMove’s key vault product is all about protecting authentication tokens, API keys, application secrets, SSH keys for cloud services, and secrets for containers and Kubernetes. Developers who do cloud native development or use cloud services, today, find it difficult to manage keys and secrets at scale. CryptoMove has this revolutionary technology that can help to solve those challenges.

If you're working with cloud services, if you're working with containers, an effective secrets management tool like CryptoMove can increase your speed of development, make life easier for developers, and also provide additional security.

What was your motivation while building up CryptoMove? What was your drive pushing you forward?

It all started with my co-founder and our CTO, Boris. He invented this technology. For decades during his career he was building distributed systems and he was always thinking about how to do that more efficiently and more effectively. Thinking about the question of “what happens if encryption fails” led Boris to developing CryptoMove. When he needed a business partner, that's when I ended up quitting my job and joining in. By the way, we are a family business — my co-founder is actually my dad. TL;DR: my dad invented this technology and needed help with the business so I jumped in.

What do you think is the most challenging thing you're facing at CryptoMove?

That's a great question. There are so many challenges with a startup all the time. I think that right now the biggest challenge that we are facing is this idea of how do you scale the organization. We've been experiencing a lot of growth: new customers, new users, new team members. Every time that you experience significant growth in the company it seems like everything has to get rebuilt in terms of the processes, whatever everyone is working on and whatever everyone is focused on. Being able to do that rapidly and in a way that maintains a really high standard for execution is a big challenge.

Can you tell me a little more about your background before starting CryptoMove?

I grew up in the Bay Area and my parents are both software engineers. They used to work at all kinds of startups and tech companies. When the dot-com bubble burst, I remember asking my parents “where did the traffic go?” because all the roads cleared up. So, I kind of grew up around tech. I ended up in college at Cal - most of my time was spent on the debate team,  where we were ranked number one in America. We would research all sorts of different topics and actually one of the things that I researched quite heavily was cybersecurity and data protection. After college, I ended up working at a startup. It was a great opportunity to learn a little bit about all the different ups and downs and parts of the startup, and I ended up starting my own ecommerce business focused on debate research for students, which was fun.

Soon after college, I ended up going to law school and became an attorney. As a lawyer, I ended up in this practice group at Perkins Coie doing data security, cyber crime, intellectual property, litigation, and privacy. We were working for technology companies, startups, big ones, small ones. I had a lot of exposure to cleaning up messes, such as API keys improperly checked into GitHub. Now, coincidentally, CryptoMove’s product is meant to avoid that. Meanwhile, my dad was working on CryptoMove in stealth, prototyping it. We were helping with the patents and standard legal work. What he really needed, though, was a business partner. So I went to my bosses at the law firm and they encouraged me to take the leap. That was about 3 years ago.

Out of all of your experience, what do you think best prepared you for your current role?

I don't necessarily think any one thing prepared me. Frankly, every day and every challenge we encounter is something new and unique. It’s all about being flexible. My approach is generally to try to learn as much as possible from people around me. There seem to be a lot of startups where founders knew they wanted to start a company and they took a very deliberate path towards doing that. In the case of CryptoMove, it kind of just happened and wasn’t necessarily our plan. We're just trying to do the best we can, taking advantage of opportunities.

Going back to the first day of working on your startup, what advice would you give yourself?

Apply to the Alchemist Accelerator, which we actually did. Not on the first day, but a couple weeks afterward. I would definitely do that again. I would just try to iterate as rapidly as possible. I think that's something that I would say could benefit any startup. Create a hypothesis, test it quickly, and iterate and move on. CryptoMove today, our product, our go to market strategy, everything about the company, could not have been predicted 3 years ago. It took a process of rapid iteration. That’s been really important.

What was the most valuable thing you learned from Alchemist?

Alchemist was huge for CryptoMove and for a lot of companies in our class. We were first time founders and even though we had a lot of startup experience, we had never raised VC funding. Alchemist set us up for our first investor, Tim Draper and Draper Associates. We met at an Alchemist Investor Feedback Summit. Alchemist set us up with our first customer, which was the Department of Homeland Security via a scouting program they had, that led them to look at Alchemist start ups. Just working with Danielle, Ravi, Ash, and everyone helped give us the building blocks of the common pitfalls that you face in a startup. Even now, Danielle is an observer on our board. We have continued to work closely with Alchemist. Across the board it was really valuable to us.

If you could do Alchemist again what would you do differently?

I think that there are things that we did while we were in Alchemist that in retrospect we shouldn’t have done. For instance, we spent a lot of time going to a bunch of pitch events with corporations. In some cases they were helpful but there is a lot of corporate innovation tourism that is easy to get sucked into. When we were working on our product and asking users for feedback, that was the most valuable thing. In many cases, corporate innovation teams are just cycling through Silicon Valley almost like they are at a zoo. It’s a common pitfall for a startup, especially at that early stage. When you meet with big companies you think you can get a big contract with them, but in reality they’re just enjoying the scenery and taking some notes on startups. Alchemist calls this “corporate tourism.” Just to take note of what really qualifies a lead and whether there is corporate innovation tourism going on can save a lot of wasted cycles.

What entrepreneurial lesson took you the longest to learn or are still learning?

I think that there are different lessons for different people. For me one of the biggest adjustments I’ve had to make is that in a startup there are ups and downs every single day. Especially as the company gets bigger, you could have massive wins in one area and fires in another area happening simultaneously. You can’t ride that emotional rollercoaster. Also, since I was a lawyer and I was a litigator, I was doing a very specific type of work that required being extremely aggressive, either defending client interests or going after cyber criminals. There’s a shift in style. There definitely was an adjustment period. I can’t write long emails anymore and definitely don’t check all my punctuation. Obviously, you can’t negotiate a business deal the same way you negotiate a settlement in a lawsuit.

What constitutes success for you, personally?

For me, for my co-founder, and I think, for everyone at work, success at CryptoMove means different things for different people. But, we all are excited about what we’re doing, about building a new product from scratch. Take CryptoMove’s technology, this idea of moving target defense and moving target data protection, which no one has ever heard of before. People think it's crazy when they first hear about it. We’ve got this really innovative technology, patented globally, that is really changing how organizations such as our government and military protects its data. That is exciting. In some ways success is being able to do it for another day, because it means we’re growing. Startups are always on a fixed timeline. There's a runway. You're always trying to get to that next level. As long as we can wake up and keep doing it, we know that we're succeeding.

Do you have any insights that you want to share to the next generation of Alchemist Accelerator founders?

It is really great to take advantage of the Alchemist network. There are people with expertise in different areas and you can fast forward a bunch of learning by engaging with the right people. At the same time, you have to really be careful about applying advice to the specific context of your business. I think that there's so many resources, especially in the Alchemist network that can be leveraged.

Do you have any insights for the next generation of entrepreneurs who are specifically manipulating and working with data?

When it comes to data, in the security space and for security startups, it's such a crowded (and overfunded) market that it can difficult to stand out. We've done certain things, like making our product SaaS first. We really focus on our users, which are developers, devops people, security engineers, rather than just trying to sell to IT managers. It’s a very different approach than what you'll see with most security startups. In today and tomorrow’s worlds, data may very well become the most important resource—as impactful and as distributed as oil. Given this, CryptoMove’s data protection innovation via fragmentation and continuous movement and mutation is vital.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley — including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1410059 2019-06-06T16:00:00Z 2019-06-06T16:00:05Z “Understanding What it Means to be a Passionate Founder”: An Interview With Derek Chau, Partner, Acorn Pacific Ventures

Over his career, Derek has been involved in over $3.5B of private and public company acquisitions. Prior to Acorn Pacific, he was the co-founder of a machine learning company in the news aggregation space and also served as the COO of a leading-edge government software company. He is a CFA charterholder and also actively mentors companies in the Dartmouth and Harvard alumni networks.

Can you tell me about your background?

I was an executive at a couple of software companies ranging from a 300-400 person enterprise software company, down to a startup level software company. Prior to that I was mostly in corporate finance.

Out of all your experience, what do you think best prepared you for your role in Venture Capital?

I served a lot of senior level operations, seeing--for a lack of better words--a lot of blocking and tackling. Dealing with a lot of headaches on the operational level really prepares you to understand what it takes to scale a company. I also had some experience operating a very small startup, working with my own team, bringing everything together, and raising capital.

Can you tell me more about Acorn? What is the approximate size of your fund? How much do you normally invest?

Acorn is a network of funds. Acorn Pacific Ventures is the fund with myself and three other partners.

Acorn was founded about 18-19 years ago as one of the first Chinese Americans funds here in the Valley, funded by a number of very successful Chinese American entrepreneurs in industry. They banded together with the vision to give back to the community, investing in founders and supporting that ecosystem.

Over time that morphed into a series of funds. Acorn Pacific is the forefront here in the valley. There are a couple funds in Taiwan and one in Shanghai, and a partner fund in Singapore. Between that ecosystem, we invest in founders and in their vision. We also look for companies that over time have an international component and can leverage our cross border experience. Things like optimizing supply chains and technology transfer.

How does your fund differ from other funds?

There are two main factors. Whereas a lot of funds have good operational people, at Acorn we  bring together all of our operational teams. From the very first founders, it is a requirement that we bring in people who have seen it from a variety of standpoints. Everything from robotics to supply chain optimization to software.

We look for people who've been through it and have got battle scars. People who understand how it works and are very sympathetic to founders, understanding what it's like to raise capital and scale a company. Understand what it’s like to go through the good times and the bad times.

Can you tell me about how you make decisions in investments?

We try not to be overly formal. We don't run traditional investment communities. Rather, we want people to meet people. So, the operating partners and GPs at Acorn want to work with folks. We want you to meet the folks who are going to be helpful and who are going to be working day to day with you.

As those conversations go over time and people become more comfortable, we run through our diligence. That is our process. We of course make unanimous decisions about the partnership. Once we are invested we get behind the company, working through the good times and bad.

How do you deal with cold calls and e-mails? Do you have any advice for entrepreneurs trying to reach out to the VCs?

It’s very very hard. We don't put a lot of weight on them. We're not trying to exclude cold emails and cold calls, but it's very difficult to get our attention. It’s not a deal that's introduced by someone in our broad network, which can be very broad. We're not going to give it a lot of weight unfortunately. By chance you may get our attention and may get a response but it's pretty rare.

What's the number one red flag you see that makes you pass on investment?

There's a lot of flags that we look for. A team dynamic is really important to us. First and foremost we invest in people. If we see that the team of founders or co-founders are not gelling or there’s some dynamic that’s missing there or if the team is not cohesive, that’s big flag for us. If we feel the technology is something we don't feel that there's much defensibility in, that’s another piece that could also raise a lot of questions. I don't think there's ever just one flag so to speak.

Can you tell me more about your investment in MetaData with Gil?

We met Gil probably a couple of years ago, and at that point the company was still very young. First and foremost I liked Gil. He had very good passion when he spoke. The market he is in is a very crowded space. It’s one that I traditionally did not spend a lot of time in, but there was something that was interesting about Gil.

After the first meeting, we continued to keep in touch. He did what he said he would do in terms of delivering, in terms of top line, in terms of product, and customer traction. Transparency was really important to us and and Gil was super transparent. When we talked, we could tell he had a lot of candor and things clicked. We could also tell he cared very much about making the best out of his company and also being successful for his investors. The fit was there in terms of the people.

How do you identify passion in entrepreneurs?

It's hard to boil it down to a few characteristics. The advice I give to all founders is to be true to yourself. If you’re not true to yourself, we can see through that. If it’s not something you are passionate about it’s, for a lack of a better word, fake. Obviously.

In Gil’s case, he was in an industry he spent a lot of time in. That's a good sign for us. He came from a frustration with this space and he saw an opportunity to make things better. Gil’s case is just one. We can tell even though he's been at a few different companies, he was very passionate about making sure he would succeed. He was hungry.

What do you find difficult about seed stage investing?

Startups are hard. Anyone who has done it knows that. It's easy to, after the fact, describe how everything went right, but we all know it's so non-linear. There's so many things that can go wrong. Everything from product market fit to technology to the team. It’s just pure luck.

For us there’s never just one thing. There’s so many reasons that a company can fail, even if a company has all the right people and execution. There's no perfect investment. For us it's very much an art and it’s really going with your gut.

Would you be more likely to fund a very experienced team with a mediocre idea or a novice team with an amazing idea?

Every situation we come across is different. It’s really hard to boil it down to such simple terms. If I had to give an answer, I would say that The Valley is full of ideas. There’s not a lack of ideas, but it’s more about the ability to execute. Operational experience counts for a lot.

Is there any one piece of advice you want to give to founders that doesn’t get shared enough?

Be true to yourself and be humble. I think humility is a really important skill that we really value at Acorn. Rejection is hard and it requires endurance and perseverance. It’s not an easy thing to do. We've done it and understand it. It’s hard to look around you see all these other startups that are getting so much money and valuations, but they’re the exceptions. If you’re having trouble raising money, just keep at it, believe in yourself, believe in your team.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley — including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1403907 2019-05-30T16:00:03Z 2019-06-06T16:00:03Z Learn how to grow your startup with Sean Ellis, the “Father” of Growth Hacking

If you’re looking for experts that can advise you on when and how to scale your startup, Sean Ellis should be one of your first calls. Sean coined the term “growth hacker” in 2010, after helping companies like Dropbox, Eventbrite, LogMeIn, and Lookout achieve breakout success and billion-dollar plus valuations.

Today, he’s the Chief Evangelist at GrowthHackers, a company he founded in 2016 to “help teams work together to drive breakout growth results for ‘must have’ products and services.” During the summer of 2012, Sean spoke at Alchemist and distilled some of his most valuable insights around product-market fit and developing strategies for growth. His advice provides a significant and preliminary roadmap for early-stage founders, as they look to take the next steps with their startups. Sean shared insights across several different, critical areas.

Product-market fit is important…but what exactly does it mean?

For every startup, finding “product-market fit” is a critical early inflection point. Sean notes that Marc Andreessen, founder of a16z, and one of the first people to coin the term, emphasized that founders should be obsessive in pursuing this state. Andreessen sees it as so make-or-break that every business can be categorized in a binary manner, as either “pre” or “post” product-market fit.

Despite its importance, Sean observes that a metric-based, universal definition of product-market fit has proven elusive. Through his operating experience, Sean has developed a potential solution to this “mystery.” Put simply, companies need 40% of their users, within a large segment of their market, to be in a place where they’d be “very unhappy” without the product. That seems like a clean, elegant solution. But, what is a large segment of your market?

Sean has a few answers. First, you should look for some type of 40% cluster within your user base. Next, try to figure out whether that group is meaningful, or merely an edge case. For example, if 80% of men are really unhappy without your product, that’s meaningful. However, if 80% of men between the ages of 37-40 in Oakland are really unhappy without your product, that’s an edge case.

While definitions are a helpful starting point, there is limited utility in theory. Sean’s unique value comes from his experiences in helping companies achieve breakaway success. To reach product-market fit, he has a few key suggestions.

Have a concrete plan for growth.

  • Pain Point First: Find that there’s real frustration around the problem you’re solving, before you even write a single line of code.

  • Early Feedback: Release an MVP to get feedback on your product as early as possible.

  • Find Your “Must-Have” User: When you find this user, or group of users, who really need your product, learn as much as you can about them. Explore some of the following questions:

    • Why do they need your product?

    • How are they using it?

    • What’s the primary benefit they’re getting from using your product the way that they do?

Sean realizes that it’s tempting to find people who don’t like your product, so that you can try to improve and iterate. It makes sense, but he emphasizes that it won’t lead you to create consistent value. Instead, he advises that you discover everything you possibly can about your “must-have” users, and find out what makes their experience “must-have.” From there, you can start to identify must-have groups and execute on their needs, as they continue to engage with your product. Sean stresses that your product roadmap should be tailored to replicate the experience that’s been resonating so strongly with these must-have users.

Funnel optimization is critical, and it always pays off.

There are a few key skills that can help founders on their journey to product-market fit. According to Sean, funnel optimization might be the most important. He emphasizes that it’s necessary to analyze every point of the conversion funnel. This process can be frustrating, because users are typically unresponsive and unwilling to give meaningful feedback.

However, even if you’re frustrated, Sean says you can't give up or give in. Even a 1% response rate, with months of funnel analysis, can provide significant value. Sean explains that in one case, a company he worked with tripled their conversion rate with minor tweaks to messaging on their platform. Through survey results, they were able to see that users were unsure whether they were actually downloading a free version of their product. A minor tweak that more clearly distinguished between free and paid versions led to the 3X increase in conversion.

Know when to grow.

For most companies, there’s a lot of uncertainty around when and how to scale. Sean suggests that it’s optimal to spend and scale aggressively when you’ve reached the key 40% very unhappy stage, and when you have a positive ROI.

He also notes that, for freemium products, the free version is an excellent customer development channel for premium offerings. This testing ground lets them observe actual user behavior and see where there’s real value. He implores the audience to think about products in their lives that hooked them on their free versions, before getting paid subscriptions. For Sean, Skype was one of these products that quickly came to mind.

The network effects complication.

Toward the end of his talk, Sean makes a key distinction: there’s a big difference between traditional growth companies, and companies that rely on network effects. He asserts that, with network effects, it’s not possible to simulate the value of the company at critical mass, because it continually gets more valuable over time.

These companies don’t have the luxury of finding product-market fit, followed by optimization and growth – they must do all these things at once, which makes the process much more challenging.  

Key takeaways in 50 words or less.

Find people who really need your product and engage deeply with them. Optimize your sales process to increase conversion at every point of the funnel. Recognize that purely viral growth is not sustainable. There has to be a “must-have” experience underlying growth, or you won’t be able to retain users.


About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.]]>
Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1402122 2019-05-23T16:00:05Z 2019-05-23T16:00:05Z “What do VCs value in founders?” An interview with Jean Kovacs, Partner at Hillsven Capital


Jean has more than 30 years’ experience directing technology companies, and delivering exceptional results with growing enterprises. She is currently president of the Northern California Chapter of the HBS Alumni Angels, a forum for Harvard alumni to connect with, learn about, and invest in quality early-stage companies. Her resumé includes serving as CEO and Co-Founder of Comergent Technologies, and Co-Founder and EVP of Qualix Group. She was named to the Silicon Valley/San Francisco Business Journal’s list of Most Influential Women in Business and has been profiled in Fortune, The Financial Times, Computerworld, Internet World, and InfoWorld. She holds an MBA from Harvard and a BS from Northeastern University.

Can you tell me a little more about your background before venture capital?

I worked for technology companies in marketing, product marketing, customer support, sales, applications engineering, and then went to get an MBA, thinking that I was going to go to Wall Street. I ended up deciding to come out to the west coast. I worked at Sun Microsystems, which went public, and then Frame Technology, which also went public. Following that, started a company (Qualix), which we took public, then started another company, which we sold to AT&T. I was always on the operations side until I got involved in angel investing. About two years ago I joined Hillsven as a Partner.

What do you look at when you're looking at a startup?

We typically focus on enterprise companies. We don't do a lot of marketing of our fund. We typically look for “curated deals”, deals that comes out of an accelerator that we trust or is referred to us by someone that we trust. We'll do two to three deals per year. We typically go in at Seed and lead the round. We put in anywhere from $500K-2M.

What about MetaData stood out from the rest of the investments you were thinking about making?

I should say that I was not with Hillsven when they invested in MetaData, so this is a little bit of hindsight on my part. One of the things we liked was that Gil started as an engineer then got his MBA and went on to be a CMO, so he actually lived the customers’ lives before he started the company. He had that domain expertise and could talk the CMO language. As he was being a CMO he was thinking, “Why hasn't anyone developed a product like this?”

We felt he had that unique combination of business experience, domain experience, and technical experience. That experience and vision, combined with energy and tenaciousness, were the right ingredients that lead him to start MetaData.

What are your thoughts on Alchemist?

I like the Alchemist team. They seem to have a higher bar for companies going in, which also results in a higher bar for companies who are exiting.

When I talk to entrepreneurs who have gone through the program, they all universally say that it was really worthwhile. There are a lot of incubators and accelerators. That makes for a lot of noise, but I would say Alchemist is certainly in the top percentile, based upon their results.

Is there anything you’re excited about in the future?

I just think there's a huge opportunity for what we do. We're seeing SaaS is leading to the democratization of the enterprise. No longer are business people in enterprises beholden to huge IT departments or huge ERP vendors so that everything has to go through. It's much more accepted now if you have an application that fits a need in an organization, to go ahead and get that and deploy it within your organization. It's an opportunity we're seeing for startups that we haven't seen for a very long time.

What do you think is the number one red flag that would make you pass on an investment?

We invest very early on. Our number one priority are the founder(s). If we don't feel good about the founder and the founding team we won’t invest no matter how hot the space is.

What makes a good founder?

First, it's someone who can articulate a problem and has domain expertise with that problem. Second, it’s someone who can attract and build a great team. Third, the founders and especially the CEO has to be tenacious. Probably less than 10 percent of the companies that get started have an easy route creating a product, bringing it to market and growing sales. There are always ups and downs, so we need to know that that entrepreneur is so passionate that they're going to forge ahead even when the going gets tough.

Would you be more likely to fund a very experienced team with a mediocre idea or a team of novices with an amazing idea?

It's about the quality of domain expertise and focus. If they're novice they have to be coachable, have energy, and be tenacious. We'd rather have someone come in and say, “I know this problem. Here's how you solve it and here's who I've talked to and here’s who I’ve sold to.” Having early traction in a company is really critical.

Which of your investments are you most proud of and why?

We’re proud of all of our investments!

Can you tell me about how you deal with cold emails and calls?

That’s a tough one. We’re so busy getting curated deals that it’s hard to answer cold emails/calls. We try to get to them, but they typically don’t get the attention that we give to curated deals.

Earlier you spoke about finding deals through references you trust. What makes a reliable reference?

In addition to a few accelerators we trust, we get deals from several sources:

1. Other investors who understand our model and know how we invest in and support our companies

2. Our CEO’s/Founders - They understand our model and we trust their insights.

3. Customers. We keep in touch with enterprises and are always talking to them about the problems they have. If they find a company who is young and helping them solve a problem, we want to talk to that company!

What separates Hillsven from other funds in the area?

We take a very active role. Typically, we lead the round, and always take a board seat. There are three partners here and we all have different skill sets. We’ve all been founders ourselves and our careers have been focused building companies, not just investing. We really spend time getting to know the company, and helping with what they need, whether they want to brainstorm on technical concepts or market fit.

When they’re getting ready to raise their Series A, we also spend time helping them and making introductions.

Bottom line: We view ourselves as partners with our investments, not solely as investors.

What do you feel like your role in the company is?

We’re there to support the CEO and the team. If the CEO comes in saying I'm really wrestling with this or that, we’ll pull in the right partner who can help. If we don't have a partner with experience in that specific area, we all have networks that we can reach out and find someone who knows a lot more about a specific area.

What you think is the biggest indicator of failure for a startup?

If I were to sum it up, I would say believing your own bullshit. Someone who pulls together a great pitch and says, “if we build this they will come” and not really having that tie into the market and customer prospects. When you look at Gil, he was a CMO and he knows the pain that they have. We have a company called Retail Zipline, another Alchemist company. The CEO of that came out of the retail space. She knows the pain. It really is having that passion where you say, “this is an issue that my team and I can fix, and it's a big opportunity.”

Is there any one piece of advice you would give founders that you think doesn't get shared enough?

Do your homework. Look at the VC’s web page, talk to their portfolio companies to figure out what they focus on, get your information all lined up. Then, have the tenacity to, in a nice way, keep on top of the process.

Can you tell me about your experience as a woman in Venture Capital and any advice you'd give to young entrepreneurs and investors?

I would say right now, it's a fantastic time to be a female in the venture and startup worlds. There's been so much awareness in the market, that I think people are really realizing the talent pool and are going above and beyond to access it.

Do you have any advice for mothers who are trying to grapple with motherhood and their career?

It's never going to be easy. One or the other is going to suffer and I think you just have to make peace with that. Sometimes you’re going to be more career-focused and sometimes you’re going to be more family-focused. I think as a mother you've got to just come to grips that you can't be all things to all people, all the time.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.]]>
Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1391644 2019-05-09T16:00:02Z 2019-05-12T19:22:37Z “Breaking Down the Path to Entrepreneurship”: An Interview with Gil Allouche, CEO, Metadata

  

Gil Allouche is a tech entrepreneur whose passion for artificial intelligence (AI), big data, and growth marketing led him to start Metadata in May 2015. As the Founder and CEO of Metadata, Gil prides himself on building a customer-first company. He is part of an ambitious team that is committed to solving a major problem that B2B marketing and sales professionals face -- generating qualified, opt-in leads. Prior to Metadata, he ran marketing for Karmasphere (now FICO), Qubole and Silver Spotfire (now TIBCO).

Could you explain a little bit more about what Metadata brings to the marketplace?

Metadata is a technology software company in San Francisco. We are disrupting the B2B marketing space. We automate the marketing operations role with automation and AI. There are many tools in the B2B marketing space for tag management and email marketing automation and advertising and data vendors, etc. What Metadata does is connect all of those tools together, learn what worked and what didn't work, and then orchestrate operations from within those technologies using an API, so that people don't have to log in every morning and manually operate those tools. That's the big vision.

Today we connect about 40 different tools in paid media and do anything from sourcing audiences to getting all of their PIIs and cookies, etc. Then, we execute campaigns on social media, retarget, and optimize all of those campaigns automatically using KPIs from Salesforce and market automation from the customers. We have about 60 customers. Some of them are enterprise and some of them are mid-market and startups.

Can you tell me a little more about your background before you started your startup?

I’m a software engineer. I’ve written code since I was a kid. I moved to the U.S. about 12 years ago to do my MBA at Babson College, an entrepreneurship school in western Massachusetts. After that, I spent eighteen months running product for B2B companies. Then I moved into the marketing realm. I was a very technical marketing manager, so I relied on 3rd party contractors to do my copy and communications. But, I had complete responsibility for on demand generation, making sure that my counterparts have a pipeline to go and sell. I did that in three companies. Two of them got acquired. At the third one, I was the first business hire. I was in a small team in a tiny room, and today Qubole is a few hundred people.

After doing that for about 7-8 years I had to choose whether I wanted to continue my career as a CMO (Chief Marketing Officer) and just work for bigger companies, or switch into the entrepreneurship realm, which is what I'm interested in, and build a product that will serve those non-technical CMOs and enable them to do what I did, but much easier. I started a consultancy with Qubole becoming my first customer. Three years later, this is where we are.

What previous experience do you feel best equipped you for your role right now?

Having the experience from both sides, as the software builder as well as the marketing software user. Building systems with AI, building Web products in the first part of my career and then switching up to doing an MBA led me to understand the business side of things and which software can solve for critical business KPIs. Then choosing the marketing space I wanted to innovate in, and then working as a CMO in a B2B company, gave me both points of view. All that prepared me for building the right software and serving the customers.

I started software companies before, and I'm always passionate and excelled in that type of culture, without everything set up, An unstable environment and high risk, that's where I thrive and every year we exist makes me better entrepreneur for the future.

Do you believe that having a technical background first and then understanding the business side of things is the best background to have? Or do you believe learning the business side of things first is more important?

It's hard for me to say because I'm already subjected to the way my career went and so it’s hard for me to roll back and say maybe there’s a better way. I think I'm well equipped to run Metadata because I have a technical background and then I had the customer experience. Would it be better the other way around? Maybe. I don't know many people who have done the other way around.

The vast majority of people that I know in my position have a technical background and they know what's possible to build to begin with. They build it in an amateur way using scripts, which is exactly what I did for eight years while I was running marketing. Then, after seeing it working, I built some of the tools myself, used them in my role and then built a generic solution for the rest of the market. It would not have been possible to do that the other way around because I wouldn't even know it's possible to fix using software.

If you could go back to the first day of your startup, when you were still building Metadata up, what advice would you give yourself?

Probably spend more time building the software. Maybe give delivery more time, building something small, focused, and that was more of an MVP (Minimal Viable Product). In my mind my MVP was more of a VP and not so minimal. It was more of a bunch of different tools put together. I think I would’ve focused on building something more holistic, but more minimized. It took us about a year to bridge that gap to what we have today.

I probably would have invested a little more in engineering and product earlier on. Today that’s our main focus I’d also recommend reaching out to all of your colleagues, former managers - those will be your first customers, advisors, investors and will give you friendly needed feedback. Finally - I think it’s critical you learn how to manage your own psychology. Starting a company can be a tough journey and you need to learn to forgive yourself, adapt quickly and include others in your journey.

What do you think is the most valuable thing you learned from being a part of Alchemist?

I learned a lot from Alchemist. I learned about how seed investors perceive companies. I think I'm good at it, thanks to Alchemist. I also learned how to pitch my company, self development and reaching my first paying customers using CAB.  That was very helpful and Alchemist definitely helped me do those. And finally the network, connections and practical 1:1 programming. Big shout out to Danielle and Ravi who are always there.

If you had to give some advice to someone in Alchemist right now, what kind of advice would you give them to make the most of the experience?

I think you have to come to Alchemist with something to offer already, meaning some technology or customers, and then take that raw material and build upon it. If you don't have much, I would recommend to wait a quarter or two until you do, because otherwise you're going to waste your time in the program.

Another piece of advice I have is to start the program before the program starts. Danielle and Ravi will attest that I was in touch with them maybe two or three months prior to the program starting, doing email campaigns to get investors, asking advice about evolution and about the rest of the things that I had challenges with before the program started. So, moving at your own pace with the leaders of Alchemist I think was the key success factor for me.

Finally, pick your battles in terms of what you want to participate in Alchemist and what you don’t. Running a business that already had some traction, I did not want to stop everything and attend every talk that Alchemist had. Rather, I wanted to keep running the business and use Alchemist whenever I saw fit, maybe 40 percent of the capacity or maybe 50 percent of the capacity. I don’t know if Alchemist will be happy with me sharing this, but that's how I set it up, and it was very successful for us because it allowed us to keep the business running, and then use Alchemist for the things that we actually needed help with. Versus, go line by line with a program that was not always fitted to us because some companies were in a very different stage. We already had 30K MRR. and were kind of already started.

Given your background, do you have any advice for other foreign founders?

Being in the U.S. I would say visiting the U.S. and going after local companies with what is called the customer advisory board (CAB), a tactic that Alchemist educates about, is a great idea. Coming here, doing the activities, being at the office, I think is very important. I would also say, bring your team members with you to Alchemist. You need them involved, and not just your founders. You want to bring your co-founder and whatever the team is and bring them into the program and get them involved.

I would say especially for foreign partners to begin the process of reaching out to Angels and Seed Investors prior to joining Alchemist and work hard on getting some funding prior to the demo day. We got some money at the Investor Feedback Summit and we got some money prior to the program even starting. That was very helpful for us to give us a good sign that the strategy of Alchemist works, prior to the program even starting. It was very helpful, especially for a foreigner who was not very knowledgeable about those things. That’s a piece of advice I would give someone who's coming from a different country to Alchemist.

Was there anyone in your life that helped you as a mentor and influenced you a great amount? If so, what about them helped you?

I'm very lucky to have many mentors. I think I wouldn’t be able to get where I am without them. Some of them belong to Alchemist, some of them belong to Alchemist network, some of them don't. First one that I had goes all the way back to my high school teacher who gave me confidence and belief that I didn't have in myself back then. That’s the first one, back when I had some issues in high school. Then, if I take it all the way to Metadata time, my first advisor, outside of Alchemist, was Mickey Alon, a serial entrepreneur from Israel. He helped me get started with my very first pitch decks, etc.

And then one of the other very prominent advisors I had to date, I would say my strongest advisor, was Bill Portelli. He is from the Alchemist network. I met him at an Alchemist event and he's been tremendously helpful with all things Metadata from sales to personnel issues, etc. Other wonderful advisors who constantly tell me things how they are include Boris, Derek, Jean, Bobby, Jonathan, Gary, Eli and the list goes on. Maybe that’s another important advice - get your advisory board early on and keep them engaged. They can do magic.

And I would say that Danielle has been very helpful. You know Danielle is kind of the de facto manager for Alchemist. She makes a lot of things happen and she's also very good at advice and very resourceful. I think she provided great advice and mentorship at times when I needed it.

What are you excited about for Metadata in the coming future?

Growth. We are onboarding more and more customers than ever before. The last four months have been stronger than the previous twenty-four months before them. We're seeing a good amount of growth. We're also seeing a lot of confirmation from the market that what we're doing is the future of marketing. So now it's a question of how quickly can we leverage that growth with the value, raise more capital, and then grow the company. I’m excited about the next stage of the company moving from 60 customers to 200. Having a fifteen person team to having a thirty person team. I'm excited about those challenges.

What constitutes success for you personally?

Success is to see a product that you really needed in the market being used by enterprise companies like Amdocs, Hitachi, and SugarCRM. Having companies like these use the product, successfully renew, excel, and giving us testimonials and case studies. For me that is success. That means that the initial idea that we had and the solution to that problem that we thought exists, these are confirmation for a product market fit. That's the first piece of success for a company at our stage.

The next success would be a big institutional venture capitalist standing behind us with a large sum of capital to grow, and of course reaching profitability. For me a personal milestone that I'd like to achieve. Those three things I think are the major successes in relation to Metadata.

Are there any other insights you've learned that you want to share with the next generation of entrepreneurs?

I think the biggest thing to do for an entrepreneur is to get started. To unblock your own limiting thoughts of “what needs to happen before I’m ready to start a company.” Nothing has to happen. You just have to start it and then break down the path to entrepreneurship through small wins. To put the first landing page together, talk to the first 20 prospects, talk to the first angel, put it on Facebook. Share it. Don't be secretive about your startup. The moment that you think you're ready to, if you have a problem that you're very passionate about and you have the domain expertise, you shouldn’t wait a second, you should just start it and then let it grow and let the market reject your idea or execution. You may have to switch, to change your idea, change your execution strategy, change your partners, what have you. Or if you see that it's gaining traction then just continue to roll with whatever is coming at you.

I would say that the biggest hurdle is for people to change their mind and say I'm an employee now and today I'm an entrepreneur. Nothing's doing it for you. You have to do it on your own. The best way to get it is to just start taking action. You don't have to resign from work right away, just devote 3 days or a week to it for a few months and you should be able to see some progress before you make the switch completely. That’s that's the biggest hurdle I would say for entrepreneurs.


About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures/year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1402112 2019-05-02T16:00:06Z 2019-05-05T12:27:14Z Seven Enterprise Business Models You Need to Know In the Age of Software


Most people never think of technology from an economic point of view. Instead, we focus our efforts thinking about the nuts and bolts of the technology. Tim Chou, a current lecturer at Stanford University, spent his career focusing on Enterprise Technology. He believes that it is important to know a variety of business models to better understand how we can sell to customers. In a talk given at Alchemist, he outlined seven important models of how software companies drive revenue, and offered further insights into the sales process.

Model One: The most typical, yet still extremely effective model: license the software to the user and then charge for support and maintenance. Tim gives the example of Oracle, which previously was a $15 billion corporation with $12 billion coming from support and maintenance.

Model Two: Make your software open source, but monetize the support and maintenance. Tim emphasizes that Red Hat is the only real example of success for this model.

Model Three: Outsource. “I’ll take over your mess and I’ll do it for less.” He explains that the amount of money to manage software is 4x the price so in most cases 75%-100% of the budget is fully allocated for the next year. Therefore, by outsourcing, you reduce the cost structure to purely human labor in China, India, Eastern Europe, etc. However, Tim goes on to outline two major flaws with this model. One, you are unable to maintain a low cost of labor for outsourced labor as workers will eventually want wages that match the workers in Silicon Valley. Two, the primary reason of system failure is human error.

Model Four: Tim explains, “The customer pays for the software and maintenance, while I’ll manage security, performance, etc. for a set price per user per year.” In this case specialization is key. If you can standardize the hardware and software then you can replace human labor with machine labor, crushing cost structures and increasing reliability.

Model Five: You alter the payment terms of Model Four. This can mean paying monthly or by other terms.

Model Six: Every business application company since 1999 has delivered in this model. It involves removing the at-home and at-customer aspect of the model, in order to standardize and reduce cost structures even more. In justification, Tim explains that while operating in model four or five, cost structures can be taken down to about $50 to $70 a user. On the other hand, students of model six can get down to $5 per user.

Model Seven: In reality, Facebook, Amazon, and Twitter are all software companies. What’s different is the way they charge for their service, whether it is ad-based models or embedding it in the transaction. An example is buying a book on Amazon, which is essentially paying for the software. In order to justify that there is an extra step in standardization, Tim argues that Google would otherwise charge around 70 cents per user per year in order to break even for searches. He explains all of their software is extremely standardized so their cost structure is entirely reduced to power (electricity).

Understanding your Customer is Key to Choosing a Business Model

These seven models offer a wide variety of choices to founders—however, in order to know which business model is right for your customers, you’ll need to talk to them! Tim believes in this day and age, we can now target our customers by first knowing who they are instead of just throwing your product out there. We can apply Geoffrey Moore’s idea of Crossing the Chasm to people who will buy into your vision and help you cross the chasm. Tim explains, a lot of the time you can tell if a potential customer is only interested in following the mainstream if they ask, “What is your ROI?” They are not your early investors. They are only interested to see if others have bought. Customers before the chasm are not large corporations, rather, they are individuals.

How do you Sell?

Once you know your customers, the challenge becomes how to sell to them. When broken down, there are two methods of selling. Both methods of selling involve “preciseness:” low and precise selling (e.g. Amazon selling $10 books, movies, etc.), and high but imprecise selling like business software, where you need fewer sales due to high value. The challenge is sitting in the middle where selling price is still high and is still imprecise. Tim makes the analogy of big screen TVs. Just like enterprise sales, there is an education cycle before you buy where you ask friends, read reviews, and do your research. Ultimately, you find that “selling is education and education is selling”.

The challenge is that your sponsor (the guy who thinks what you’re doing is cool) is unable to answer questions to others about your software. Tim explains that the key is the art of storytelling. It really matters who is saying what. Without the right character telling the story, there is no credibility. Stories are a key part of learning as it activates a different part of the brain and your information is more believable.

There are three types of stories: Man versus man, man versus nature, and man versus self. When telling a story about your product, communicate it in 3-5 points, identify the problem, and identify the value of your solution. By comparing the situation before your product to the situation after your product, you create value.

What does this mean?

It is no surprise that in order to sell to customers, you must understand your customers. It is important to understand that while your customers’ ability to use your product relies entirely on how you structure your business model. Their role as a customer lives entirely inside the model you choose to adopt. Therefore, when analyzing your product’s reputation, you can not overlook how your model is structured. By being aware of which business models work and which ones don’t, you can begin to better understand your customers as a whole.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.


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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1396820 2019-04-18T16:00:03Z 2019-05-30T04:25:56Z An Interview with Arun Penmetsa, Partner, Storm Ventures

 Arun Penmetsa is a Partner at Storm Ventures and focuses on early-stage Enterprise software companies, primarily in SaaS, Security and Digital Health. He has extensive experience building enterprise software solutions at Oracle and Google. Arun is passionate about healthcare and using technology to improve outcomes and drive efficiency for patients, providers and payers. He is also an investor in several healthcare groups in India where he serves as an advisor on technology and population health. In his spare time, Arun enjoys spending time with family and hiking.

How did you get into the world of VC? Was it your first job?

No, to give you a little bit of background, I started out on the technology and engineering side. After college and graduate school, I worked at Google and Oracle, building enterprise products for about five years. Then I went to business school, and joined Storm Ventures right after that. It wasn’t my plan going into business school, but I got introduced into the world of venture capital (VC) when I met a lot of VC’s, mostly at startup conferences and other networking events. I was really curious, because one of the things I was trying to do in business school was to learn a lot more about other industries. I’d only worked for a few companies, so I was curious how the industry worked. I spent the summer between my two years of business school at Storm. I really enjoyed the work I did, and really enjoyed working with the Storm team, so I was happy to have the opportunity to come back full time.

Did you see yourself doing this, or being where you are today, when you graduated college?

When I graduated from college, and when I finished graduate school, I was thinking about a more tech-focused career. Like I said, I worked in engineering and product at Google and Oracle. I was trying to transition more into a startup environment, so no, I wasn’t really thinking about venture capital.

Why did you invest in 4me, the Alchemist company? What differentiated them from other investments you were thinking about at the time?

A couple of things. At Storm, we focus on enterprise software and spend a lot of time on industries that are not necessarily mainstream. So I was always interested in the service management space. Given the general level of innovation that had been happening, the service management space was lagging a bit compared to other industries, so I thought there was a lot of opportunity there. When I met Cor, the founder and CEO of 4me, one thing that really impressed me was the caliber of their team. Cor’s background in the space—having started two other businesses, and having successfully exited them really stood out. I thought the team had a unique perspective and depth of knowledge about the industry. That was one of the biggest factors for us.

We also have a broader thesis about how data flows through a lot of these industries. Historically, if you think about it, the way that a lot of technology is set up in these industries has created data problems. There are different systems and different owners for a lot of the data that is needed for these companies to manage their own workflow. As service management has evolved, and this is playing out in a lot of different industries, the need to operate across boundaries and silos has increased more and more, whether that’s geography, or technology systems, or different departments. I don’t want to get too into the weeds, but service management is broadly going through a transition where the new focus is on SIAM or Service and Integration Management. The team at 4me really built their product for that. We thought the shift in the industry really aligned with the expertise the team had, so we thought that was a good match. Plus, they were winning against the more established incumbents as a startup that was bootstrapped, so the growth was impressive. A combination of these factors led us to invest in their company.

What are your thoughts on Alchemist in general?

I think the program is great. I’ll give you a little background about Storm. We’ve been around for about 19 years, invested through five funds, and we’ve pretty much been enterprise focused for those 19 years. The last couple of funds have all been focused on software. In many ways, what Alchemist does is really a perfect fit for us. It’s definitely a sector and stage fit, because we mostly do series A investment, so that’s been fantastic. I’ve met Ravi and Danielle a few times, and I think their focus on running a slightly longer program is important, because things take longer in the enterprise space, particularly as you go into some of these deep tech industries. This helps companies get to a stage where they can really start talking about go-to-market and what levers a venture capital firm like us can bring. I think that’s critical because a lot of times, when you work with accelerators, they have great founders and great companies, but it still ends up being too early for us.\ Alchemist has set up a good model, a long enough program with good mentorship and support, where you get to a stage where a VC firm like us can add a lot of value. I think I’ve been going to Alchemist Demo Day since the second Demo Day. It’s been great working with their companies and seeing them as they grow.

What’s the size of your current fund and how does that compare to funds at a similar stage in Silicon Valley?

Our current fund is $180M, which has been about average for the previous funds as well. Funds are obviously getting bigger, just given some of the recent raises we’ve seen. We’ve decided to stay at a similar size, primarily because we really focus on investing in companies just as they’re getting to the product market fit stage and we work with them on finding go-to-market fit and scaling beyond that. We help them think about building the right sales model, building the right playbook, and thinking about what hires they should make. We can definitely make the fund bigger and bring on more investors, but we’ve found that this has worked for us. Companies that we really want to work with are in that early stage, where they want that first institutional investor. We’ll partner with them and help them scale through the right process.

What’s the typical check size and how is that typically structured?

Typically, our check sizes for the A rounds are in the $2M to $5M range. We can go lower, and occasionally we’ll do seed rounds, or we’ll do larger rounds sometimes. Storm has invested in about 150 companies, led investments in a number of cases, and we’ve co-led, so we’ve pretty much worked with everyone. We’re not very rigid in terms of needing 20% ownership, but we like to own as much as possible, because we tend to be really hands-on with our companies. We’re definitely not a fund that makes a huge number of investments. We are somewhat concentrated and would rather go deeper with our companies than just go broader.

Is there a stage you typically prefer to invest?

Series A. The sweet spot is definitely the A for us.

Do you have a specific vision or focus that differentiates you from other funds?

The emphasis on go-to-market. We spend a lot of time working within the firm and working with other organizations that we can bring in to support our portfolio. Once you’re selling your product to a handful of customers, and there’s repeatability in the use case, we can help you figure out how to scale. One of the biggest issues is that early on, getting to that $500K or $1M run rate, a lot of that comes from founder sales. It varies depending on the size of the account and other factors, but when you make that transition to a sales team and the founder steps back a little bit, a lot of times that process doesn’t go smoothly. The depth of knowledge that the founders have about the sector, the problem they’re solving—it’s hard to replicate that throughout the teams. What we try to do is really think about the go-to-market as a science as much as we can. We want to think about the right playbook, the right sales model, the right customer you’re selling to, and really building those processes out.

We spend a lot of time with our companies building out that process hands-on, so that they can effectively make that transition to scaling, and they don’t hit a speed bump when they get to that stage. When companies come to us, a lot of times we’ll see that they have a grand vision and a good roadmap, and have predictions that are up and to the right that we hope they’ll hit. But on occasion, they’ll stumble a little bit. A lot of it is making this transition, and getting your playbook down, with the right sales model. That’s one way that we try to differentiate from other firms. Additionally, we’ve been very focused on enterprise for 19 years, so we have a huge network in the space across a variety of industries, that can add value to our companies.

How do you think you differentiate yourself individually from other VC’s?

To build on what we talked about, we have built deep relationships in various enterprise sectors given the focus over many years. I’ll give you an example: I spend a lot of time focusing on healthcare at Storm. Over the last few years, we’ve built a strong healthcare practice. As part of that, we have connections to a lot of health systems across the country—including physicians, practitioners, and entrepreneurs. In that one example, we can definitely bring a lot of those connections to bear for the startup. We’ve sat in a lot of these practitioner’s offices, so we can really understand the deeper workflows, that comes with selling to major players and providers. A lot of the work that happens on the backend isn’t really visible to these companies. That’s just one example of the insight and level of connection that we can bring for our portfolio. In terms of the broader firm itself, the go-to-market is a big area, but we also bring in a lot of experts who can specifically give advice on sales and marketing. One other area where I’ve spent a lot of time is security. In fact, we have a number of CSO’s working out of our offices pretty often.

What makes an investment particularly compelling and what’s a big red flag that would make you pass?

In terms of red flags, maybe this is an obvious one. We’re looking at mostly enterprise, so if the founders have never worked in industry, I think that’s a big red flag. It’s not that I wouldn’t talk to them or not invest, but it’s something where I’d definitely want to dig in more. Especially if it’s an area like Cor with 4me and service management, it’s hard for an outsider to really get a sense of what the problems are, and what the incentives are, in terms of why these problems get created. So, it’s not always a technology solution and it’s not always that the best tech wins in a lot of these cases. We really think hard about the unique insight that these founders are bringing, and how their background and experience really leads to that.

On the flip side, things that I would definitely look for, because we invest so early and have to bet on the team, would be the background of the founders. We also look for their early ability to win customers. A lot of times, we see founders that work hard and have passion, which enables them to get customers. However, a lot of the customers are using the product for different use cases. That’s fine early on, because they’re still trying to find the right product, but we’d like to understand what’s really working, what’s the sweet spot early on, so that they can find repeatability. I think that repeatability is important because that leads to more usage and lower churn. That’s when you’ve really found a pain point worth investing in.

We also think about market transitions, and ask if there is something fundamentally changing in the market. Not just a better version of what’s been done before, but something fundamentally changing in the market that will lead people to adapt a new technology, a new product, or a new workflow. When we meet entrepreneurs, we try to already have a thesis on the market, so that we can make faster decisions about whether the idea makes sense or not.

What do you think separates a great founder from a good founder?

One of the things is the ability to hire really great people. As a founder, you have insight into a certain area, but you can’t do it all. That’s why a founding team in general needs to be well-balanced. I think the biggest thing is being able to sell people on your vision and hiring people that are better than you. If you can hire well, I think in many cases, the rest of the issues can be addressed, because you’re getting the right set of people that can work together and solve problems. It’s a hard thing to test for, so we try to spend a lot of time with our founders.

Would you be more likely to fund a really experienced team with a mediocre idea, or a team with no experience that had an amazing idea?

It really depends on the idea and the use case. I would say I’d pick the team over the idea, because it’s unlikely you’re the only one with the idea, meaning that a lot of your success is based on execution. Ultimately, you really have to hustle and execute. On the flip side, if I can add a caveat, the one area where that can be a little more murky, is when there’s a huge market pull. In that situation, a mediocre team in a market that’s really taking off can probably execute better than a great team in a market that has no momentum. If the market is really taking off, a good team can have better outcomes than a great team in a bad market, no matter how strong they are. Oftentimes, we have theses in certain areas, so we have some view on the market and how that might impact these companies.

If there was a piece of advice that you’d give to founders who are raising money that isn’t shared enough, what would that be?

Founders often focus on the current product that they’re selling today and their long-term vision, which is grand and massive if you achieve it. However, a lot of times, in the middle, there’s a big gap. Having a clear strategy for how you’ll progress beyond the immediate pain point that you’re solving today is something that people don’t spend enough time on. I think having a viewpoint on how the market evolves is critical. It’s knowing what transitions are happening in the market and how that gives them tailwind, and understanding why that is the case.

Which investment were you most proud of and why?

Obviously, I like 4me quite a bit. I don’t know if there is one I’m most proud of. Going back to the industry transition idea, where it’s critical to find the right time to make a change in the industry, some of the best companies get the timing right, where many others are too early or too late. In healthcare, there’s a company we invested in called Lexigram, that’s helping payers and providers transition to the value-based care model. They’ve done really well. In security, there’s a company called TruSTAR that’s truly leveraging how companies share information with each other and really enabling that. Those are a few.

What areas are you most excited about now and moving forward into the future?

Security and healthcare are two areas I am excited about due to the changes taking place. A broader answer is that no matter what industry you’re in, if there’s a market transition that’s happening, I would be interested in learning more. The other thing that I think a lot about is the whole idea of the data economy. Historically, a lot of data was stored in silos across organizations, team, and geographies. Any company that is truly building insights across such data is a company that I would love to meet and speak with. So, there’s not one particular area, but these are a few of the areas that excite me.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures/year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1396806 2019-04-11T16:00:03Z 2019-04-18T16:16:28Z An Interview with Cor Winkler Prins, Founder & CEO, 4me, Class 18

Cor’s professional goal is to help the Enterprise Service Management (ESM) industry reach its next maturity level by providing easy-to-use functionality for the support of SIAM (Service Integration and Management).

In 2010, he co-founded 4me to make it easy for all support domains (IT, HR, Facilities, etc.) within large enterprises to work seamlessly with each other, as well as with their managed service providers (MSPs).

In 2003, he helped the ITSM industry establish a new benchmark: the 30-day IT Service Management implementation. By using the predefined processes and detailed work instructions of the Alignability Process Model, and combining that with role-specific training material, a pre-configured ITSM application, and a standardized implementation methodology, it became possible to implement six processes within 30 workdays.

In 1999, Cor helped the IT Service Management industry move away from highly customized implementations based on different interpretations of the ITIL best practices by developing the Alignability Process Model (APM). This was the first comprehensive set of integrated IT Service Management processes that include detailed work instructions for IT professionals. The APM has subsequently formed the basis of all other ITIL-based process models, such as BMC Software's Service Management Process Model and HP's Service Management Reference Model.

What exactly is your startup bringing to the marketplace?

We provide an enterprise service management tool, which essentially is a self-help portal for enterprise employees. When they get stuck or they don't know what to do, and they need help from the Human Resources (HR) departments, or the Legal Department, or from IT, they can submit a request using that self-help portal, or use the app on their smartphone. We route that to the party that should provide that kind of assistance—and that can be an internal department, like the HR department or the IT department, or an external company, to which the enterprise has outsourced a service. For example, this might be the payroll service or the legal service. If all contracts are reviewed by an external legal firm, and that firm also uses 4me, they would link up their 4me environment with the environment of their enterprise customers. When that legal department or somebody coordinating the legal activities of the company wants to pass a request from one of the employees to get a contract reviewed, for example, then they just shoot it off to that external firm using our tool. In the background, we keep track of all the agreements that the enterprise has with the different service providers that employees in the core business rely on.

What was the motivation in creating this company?

In Silicon Valley today, there are a ton of Enterprise SaaS applications being created. Within an enterprise, the employees of the marketing department, for example, go to trade shows and they see something like MailChimp that they like and want to use. They come back and they talk to the IT Department, and then the IT Department says “I don't know, it’s a cloud solution, we’re not familiar with the cloud, and we don’t have anyone to set it up for you.” If the marketing department is persistent enough, then the IT department will hire a consulting firm that has experience with MailChimp and will ask them to set it up. They’ll do a quick security check before purchasing to make sure it meets the necessary requirements. Then, this external firm will set up the MailChimp environment and integrate it, maybe with Salesforce, or with the corporate website, which might run on WordPress.

Once it's running, everything is fine, but then the marketing department wants to do a particular campaign, and for that, they will want to create something special on the corporate website. That needs to be integrated with MailChimp again, so they need to call back the consultants. Or they might discover a bug, or they want to upgrade, but basically every time the marketing department wants to do something special, they need to rely on these consultants. Over time, these consulting firms that specialize around certain technologies like MailChimp or WordPress or Salesforce – they keep getting repeat business from the enterprise. But, as people within the enterprise run into issues with the service, or they have questions or requests, they’ll send requests to the IT department, but they don't have any expertise in how to configure or reconfigure these Enterprise SaaS applications. What they do instead is, over time they establish such a tight relationship with all these different consulting firms that they use for these different technologies that they start to demand service level agreements. This is really good for the external firms, because it means recurring revenue—very steady and reliable. What the enterprise then wants is to have an easy means of collaborating with external firms, and tracking the quality of service that they're getting from each of their external providers.

That is basically what is lacking in the enterprise service management space, a tool that can link enterprise customers to all the different parties that provide services to them. Then, the companies don't have to retype every request that they get from their employees into a different service management tool for one of their external providers. They get accurate reporting on the quality of service that they're getting, and the providers get the same information about the quality of service that they are delivering to their customers. So, when there are issues, they know that there is an issue, that the data hasn't been manipulated by either the customer or the provider, and that the data is reliable. This lets them simply concentrate on making sure that the issue does not recur.

What do you think is the most challenging matter that your company is facing right now?

In the enterprise space, there are a couple of things that you really need to have sorted out well. The first thing is security. That extends immediately to privacy, particularly if you're doing business globally like we are. You have to take very strict privacy regulations into account, particularly in Europe where the GDPR came about last year. That has a huge impact on providers like us. We need to make it easy for our customers, who store, for example, HR data—which is very sensitive. We need to allow these large organizations to prove to auditors that they are doing everything that can reasonably be expected to keep their employees’ data secure. When something bad happens, they need to know how to respond, and how to coordinate that, and they can use a tool like ours for that. Most of our customers in Europe do so. But, there are additional things that our tool needs to be capable of, because of the GDPR. For example, in our tool, a lot of focus has been put on being able to audit what has happened in the past. The GDPR on the one hand demands exactly that, but on the other hand, if an employee, for example, demands from the company that the data is erased, which is “the right to be forgotten” in the GDPR, then the tool needs to be capable of removing the entire history, the entire audit trail.

Most enterprises, they demand that their providers are SOC compliant. Services like ours, and many Enterprise SaaS applications, process data from these organizations. We need to be able to prove on a regular basis that your tools are being submitted to advanced security testing, penetration testing, by a reputable firm. We need to be able to provide the audit  reports that our customers require. It's all pretty standard for large enterprises. For us it means that we pay a significant amount every year, simply to stay compliant for our large enterprise customers. Their auditors will come and check. It is very costly to do that, but it’s necessary to play in this space.

Can you tell me a little bit more about your background before you got started and how that prepared you for what you're doing now?

I've been in this industry, the service management industry, for more than 22 years. I grew up with a new methodology, a new set of best practices that were initially published in the U.K. This set of best practices is called the IT Infrastructure Library (ITIL). It quickly became popular worldwide, but the thing that we started to do is to build tools to support those processes. The first company that I helped set up, together with our CTO, Laurens Pit, a co-founder of 4me, sold to Hewlett-Packard. For us, that was the first time that we went through this cycle. Later on, me and Laurens both went our own ways. I started a company focused on service management, more on how to properly deploy service management in very large organizations on a global basis. We licensed intellectual property on that to specialized consulting firms around the world. We sold that company to BMC Software, which at the time was the leader in the service management space. Laurens later sold his company to ServiceNow, which had then just become the leader in the service management space. By combining our experience, we decided that we had sufficient background to take on these more established players, like ServiceNow and BMC Software.

We found that they were completely missing the boat on the cloud, although ServiceNow would definitely disagree with that, of course. They should be applauded for getting organizations onto the cloud with their service management solutions. However, they did it in a way that did not fully make use of all the capabilities that the cloud offers. Essentially what they did is provide a separate infrastructure for each of their customers. It's virtualized, but it doesn't allow for collaboration between organizations, which  is where they are now lacking. When we saw that misfit, between what was happening in reality, with enterprise companies selectively outsourcing more and more of their services, and what the service management tools on the other hand were providing and the direction that these tools were going in, we thought that this was silly. Because in a couple of years, there will be organizations who run into a wall because they simply won’t be able to manage the large number of providers they have to deal with on a daily basis using their traditional enterprise service management tools.

What made you want to apply to Alchemist?

We had been in existence for a few years before we applied to Alchemist. We bootstrapped the company and were not in need of additional funding, because basically we had sufficient customers to cover our costs. Whenever we signed up more customers for our service and had more revenue coming in, that’s when we would add more people to the organization, not before then. So, we were not making a profit because we were reinvesting every dime that we received from customers into the growth of the company. The reason why we decided to join Alchemist is because we wanted to establish a narrative for investors. Ultimately, the goal for us is to do an IPO. At that time it has to be a logical narrative for future investors. We’ve identified a number of stages in our path from where we were at that time to IPO. On the investment side, we realized that we needed to get some funding to accelerate. Particularly in the areas of sales and marketing, where we had little experience, we needed to bring some people in.

What we decided is that we’d sign up with Alchemist, which is very well-respected in Silicon Valley by other venture capitalists (VC’s). They would be able to open the door with other VC’s. Neither myself nor my cofounder went to Stanford or MIT, and we needed a way to establish more context in Silicon Valley. That’s what we were looking to Alchemist for, and that has been very successful. Even before we graduated from Alchemist, we were able to secure a funding round from Storm Ventures, which also specializes in Enterprise SaaS.

How would you describe your experience at Alchemist?

I really enjoyed it, and I learned so much. When you’re working with your product, mainly on a day-to-day basis, and trying to get more customers and look at features that set your product apart, you really have to switch your mindset at Alchemist to think about growth. Not just from one customer to the next, but thinking in broad strokes. In thinking of ways to get there, you’re thinking about funding as one way of helping you, but when you have funding, you need to find out what you’re going to do with it. You don’t have time to think about that during the day. Having certain topics addressed on Thursday evenings was really nice, because it helped us look at our company from a different angle, which always sparked new ideas.

What do you think would define success for you and your company in the next 12 months?

We’re trying to gain market share, and we primarily measure our growth by  the number of users on our services. We track our ARR, and in the past few years, we’ve been pretty consistent in growing at about 50% ARR YoY (year over year). Ideally, if we do things right, we should grow a bit faster than 50% this year. That is always what we’re shooting for every year – that we get our sales and marketing so well-organized that we manage to sign up more customers, more quickly.

What insights would you want to share with foreign founders, and the next generation of founders more generally?

I believe that the focus on SDR’s (Sales Development Reps) – sending out emails, hiring sales reps, setting up sales calls to make appointments for demos, etc., no longer works. A few years ago, when it was new, it worked. These days, people get so many of these calls that they’re no longer effective. That has been a focus to some extent during the sessions at Alchemist, but I think it’s time to start looking at alternatives, like teaming up with industry analysts, seeing how you can use trade shows, seeing how you can carve out your niche. That is something Alchemist helps with quite a bit. There were a few sessions that focused on that, and gave us some great ideas.

For the foreign founders, I believe that it is essential to be in the Bay Area. I don’t think it’s wise to think you can get VC funding here, while not being here. I always tell foreign founders that they also need to be a Delaware C Corp. I also tell them that it’s basically impossible to hire someone in the Bay Area if you’re living abroad. If you do manage to hire them, why didn’t they already have a better offer? It’s better to source talent in Eastern Europe, where people are super well educated, and not cheap, but affordable by Bay Area standards. If the founders are from India or Europe, and have a good understanding of the local culture, they should be able to manage people in their country of origin, from the Bay Area. The other thing to keep in mind for foreign founders is that it’s really hard to get visas. I’m a green card holder—I had to renew last year, and it was incredibly painful and time consuming. If you’re traveling with an expired green card, even if you applied for renewal at the right time and have a temporary extension, it becomes painful every time you re-enter the US. Why not just work remotely with your colleagues so they do not need to come to the US?

What are some highs and lows you’ve had in the last month?

One of the highs recently was an email I received from the legal department of a large managed service provider (MSP) that we’ve been working with to establish a partnership. We’ve been working with them for over a year already, and it’s taken a lot of time to go through their incubator process of looking at new technologies that they can use to get a competitive advantage. The email included a signed reseller agreement, which was the major milestone we’d been hoping for. A big low would be when one of your people who you’ve been training and investing in, leaves because they can earn 150% of their salary with another, bigger company. I don’t blame that person at all, because we can’t realistically match the offer, but it does set you back. The highs and lows come on a daily basis. You need to be able to stay in the saddle, particularly during the first few years, which can be an emotional rollercoaster—but also the fun part. Some people thrive on that, the adventurous nature of startups. That’s one of the things I really enjoyed about Alchemist—you could tell when one of the founders in your class had a rough day or a rough week. It was so helpful for someone to be able to tell their story and feel the support from the group, even just the emotional support. As a founder, you can really feel alone sometimes, especially when the rest of your team is abroad.

What skill or lesson has been the hardest to learn, and has there been anyone that really helped you become a better founder?

Pitching. I was not good at providing a decent pitch. At Alchemist, it was super helpful, not just to get practice, but also tips about what to do and what not to do. It extends not just to pitching VC’s, but also talking to customers. At a certain point in time, when you’re talking to CIO’s or C-Level Executives, they don’t care about the functionality of the tool anymore, they care about the vision. When you can paint that vision for them, if they get grabbed by it and feel like joining you on that journey, it’s wonderful. Alchemist has helped with that a lot.

At Alchemist, the book recommendations were also really helpful. Each and every lecturer had something to teach us, some little nugget that we could take home with us and stew over, in addition to all the other things we learned. It opened a world that I hadn’t paid much attention to. I really enjoyed developing a new skill, like pitching, and it was definitely worth improving in that area. The experience was certainly worth it.

About the Alchemist Accelerator

Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures/year. Learn more about applying today.

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Alchemist Accelerator
tag:blog.alchemistaccelerator.com,2013:Post/1375963 2019-02-20T15:00:00Z 2019-02-20T15:00:04Z Joint Press Release - Alchemist Accelerator & BASF

By investing in Alchemist Accelerator’s digitally-focused fund, BASF Venture Capital promotes innovations at the intersection of chemicals and technology.

BASF’s investment into Alchemist Accelerator promotes digital innovations in the chemical industry 

  • Alchemist will fund digital startups driving growth of the chemical industry
  • BASF accelerates its outreach towards technologies like artificial intelligence, internet of things and robotics

    San Francisco, California, and Ludwigshafen, Germany, February 20, 2019 – BASF Venture Capital is investing $2 million into Alchemist Accelerator’s fund, allocating at least half towards investments in 3D printing, agtech, material informatics, nutrition and, technology game-changers. This investment supports BASF’s strategy to leverage digital technologies to drive business growth.

    “Alchemist has built a strong reputation for attracting the best in the digital ecosystem. We are thrilled to officially join Alchemist as a Limited Partner”, said Markus Solibieda, Managing Director at BASF Venture Capital. “Digitalization represents unprecedented opportunities to create value for our customers and develop new business models. By investing in a digitally-focused fund, we promote innovations at the intersection of chemicals and technologies like artificial intelligence, internet of things and robotics”, Solibieda continued.

    Since Alchemist’s debut in 2013, 24 companies funded by Alchemist have been acquired and over a hundred have gone on to raise significant funding rounds from the top venture capital firms in the Silicon Valley – including Andreessen Horowitz, Bessemer Venture Partners, Draper Fisher Jurvetson, Foundation Capital, Founders Fund, Greylock Ventures, Menlo Ventures, Redpoint Ventures, Social + Capital Partnership, and True Ventures.  

    “It is an honor to welcome BASF Venture Capital as a Limited Partner with Alchemist. Some of the most exciting innovations we are seeing, are at the nexus of the digital and material – few partners are as equipped to bring expertise in that area as BASF. We are thrilled to officially welcome BASF into the Alchemist family”, stated Ravi Belani, Managing Director at Alchemist.

    The Alchemist Accelerator seeds 75 startups per year and provides a structured path toward their first customers and fundraising. The 6-month program offers privileged connections to the top enterprise coaches, early adopter customers and investors. Alchemist just debuted Class 20 on January 23, 2019 to over 200 customers, partners, and investors at Juniper Networks in Sunnyvale.


    About Alchemist Accelerator

    The Alchemist Accelerator is a new venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. The accelerator seeds around 75 enterprise-monetizing ventures through three programs per year. Over 50% close institutional rounds within 12 months of their Alchemist Demo Day. Ventures, Menlo Ventures, Redpoint Ventures, Social + Capital Partnership, and True Ventures. 

    For more information on the accelerator, please visit www.alchemistaccelerator.com.


    About BASF Venture Capital

    BASF Venture Capital GmbH (BVC) was founded in 2001 and has offices in Europe, the U.S., China and Israel. The aim of BVC is to generate new growth potential for BASF by investing in new companies and funds. The focus of investment is on chemical products and new materials, software and services as well as innovative and digital business models in the broader field of chemistry.

    Further information at www.basf-vc.com.

     

    About BASF

    At BASF, we create chemistry for a sustainable future. We combine economic success with environmental protection and social responsibility. The more than 115,000 employees in the BASF Group work on contributing to the success of our customers in nearly all sectors and almost every country in the world. Our portfolio is organized into six segments: Chemicals, Materials, Industrial Solutions, Surface Technologies, Nutrition & Care and Agricultural Solutions. BASF generated sales of more than €60 billion in 2017. BASF shares are traded on the stock exchanges in Frankfurt (BAS), London (BFA) and Zurich (BAS).

    Further information at www.basf.com.


    Media Contacts: 

    Alchemist                                                       BASF

    Danielle D’Agostaro                                        Inga Franke

    Phone +1 415-527-0158                                 Phone: +49 173 3099242                                 

    danielle@alchemistaccelerator.com                inga.a.franke@basf.com

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    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1371287 2019-02-07T17:00:04Z 2019-02-07T17:00:04Z “Founder-friendly” ...until you stall

    Founders who are in the midst of their fundraising roadshow will pitch VCs who say they are “founder-friendly” in regards to how they work with founders to help them build their companies. Here are 3 tips to connect the dots between the self-proclaimed founder-friendly VC’s mindset and the tough, but fair, conversations they will have with you when your business hits some road bumps.

    Tip 1: “Friendly” might not mean what you think it means

    If your startup has multiple founders, it is typically the CEO co-founder who is the point person to negotiate the term sheet. As the CEO co-founder, you need to have the self-awareness to accept that the VC acts as the corporate stewards in the best interest of the company, their LPs, founders, and employees. The rubber meets the road when your startup has a critical business issue. It could be the business is not performing at the hockey stick growth level, or that the company's brand was hurt by a devastating Human Resources (HR)-related issue due to company culture problems.  

    Great CEOs have self-awareness. They understand everyone is friendly when you are hitting your sales targets. But when you miss two consecutive quarters of revenue, or when your startup is on the front page of the WSJ or TechCrunch for a HR issue, there are consequences. The way the CEO leads and the speed it takes to navigate the startup out of the storm will dictate how long the relationship remains friendly.

    Tip 2: Deal Terms exist to de-risk, not to offend

    VCs and founders work with law firms to deploy billions of dollars a year in venture funding. There are few bad actors and no two term sheets are exactly the same. There are also many deals that fall apart. That is why founders are encouraged to get multiple term sheets. But a term sheet with a lower valuation than you expected or aggressive downside protection doesn’t mean the VC is not founder-friendly. It means that your traction, net revenue, growth, and maybe the A team, is not in a place to give you leverage in the negotiation. That is what is reflected in the term sheet deal terms.  

    The more uncertainty the Venture Fund has in your business, the more they will want to protect their downside and their LPs’ investment. Traction and revenue growth will drive better terms. Be willing to re-engage with investors who have passed on you in earlier rounds. Plenty of VCs miss deals that they wish they could redo.  

    Tip 3 The intersection between founder-friendly and board governance

    The CEO co-founder is the only founder who reports directly to the board. It is the board’s role to hire and fire the CEO. This is an interesting dynamic when you have multiple founders. No matter how you package it, the lead Series A Partner will sit on your board and will have the power to be not-so-friendly when the business is not performing. Again, this doesn't mean they can’t empathize with the sacrifices founders have made. At the end of the day, the board needs to ensure the company is growing and that CEO is the right person to make that happen.

    About Darren Kaplan


    Darren Kaplan is the Managing Director of The Last 90 an early-stage venture fund that invests and operates companies that are redefining the future of work. Prior to that Mr. Kaplan was the co-founder of hiQ Labs, a data science company, informed by public data sources, applied to human capital to make work better. Mr. Kaplan is an Alchemist Accelerator Selection Committee Member and Mentor.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The Accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The Accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1353321 2018-12-20T17:00:03Z 2019-02-07T19:47:00Z The Math Behind Product/Market Fit


    What is a best-practice, repeatable process for validating product market fit? This is one of the most common questions I am asked. As an Alchemist start-up mentor, I help founders build a sales process to close their first 10 paying lighthouse customers. During my office hours, I am lucky enough to coach technical founders who are brilliant when it comes to math and process, but still sometimes need guidance when it comes to fine-tuning strategy.

    The most impactful way to determine product-market fit is a strategy I call the “1x3 Discovery Process Strategy”. For every 1 hour you code, you should spend 3 hours on discovery calls to understand, validate, and be able to apply your understanding of the market.  

    The “1x3 Discover Process Strategy” will reduce cycles and increase the speed at which you can prove you are on your way to market validation and traction objectives. Here’s how:

    1)  Discovery calls gather actionable data to make sure that you build what people will pay for
    Discovery calls are about data. The better and more effective the questions you ask, the better the data. If you have bad data, your product market fit hypotheses will be flawed.  Your code also has a high probability of being worthless, meaning no one is using what you are building. Since, by definition, product/market fit equates to being in a good market with a product that can satisfy that market, solid data is all about confirming and ensuring the best path.
    2)  Open-ended questions are crucial. Here’s where founders get it wrong
    1x3 questions lead to great product data. Product market fit discovery questions need to be open-ended.  There is no data value in “Do you have x problem (yes or no)?” More impactful questions are:
    • Tell me about your current situation.

    • Why is this a problem now?

    • What have you tried in the past to solve it?

    • Why is this a priority now?

    These questions are gold when it comes to understanding product/market fit. Because they are open-ended, they give the buyer/champion or influencer you are speaking with the opportunity to be thoughtful in their response. Your buyer is able to reflect about their current day and tell you, in their words, stories and examples about the problem from their point of view. Rather than asking a question that implies you know the answer or that direct the answer, an open-ended question creates the opportunity to hear answers around topics you may not have anticipated. Great founders understand how their customers think about their problems, the impacts and value of a solution to their problem, and how your solution fits within their workflow.

    3)  Finding market fit

    Finding market fit means that people you don’t know will pay for your solution and renew it when you increase the price. An ineffective question like “Did you like what I showed you? yes/no” doesn’t add much value or drive any understanding.  Better questions are:

    • Tell me about your ideal solution.

    • What do you like/dislike about your current solution?

    • How does what we want to do compare with your current tools?

    Remember these questions are designed to ensure you validate that the prospect will PAY for your solution to their problem.

    4) Charting the path for coding what customers will pay for

    As tech-cofounder, coding is your superpower. Your kryptonite is your enterprise sales experience.  With the right discovery questions, you can code in half the amount of time and ensure you incorporate the right features your target wants and will buy.    

    The 1x3 Discovery Process Strategy is a process to ensure you manage your time. Better data will always set you apart from your competitors. By asking the right questions, and adding to your knowledge and insights, you will come to understand the customer better than they understand themselves. Coding, from this vantage point, becomes the easy part.

    About Darren Kaplan

    Darren Kaplan is the Managing Director of The Last 90  http://www.thelastninety.com  an early-stage venture fund that invests and operates companies that focus on the future of work. Prior to that Mr. Kaplan was the co-founder of hiQ Labs (www.hiqlabs.com), a data science company, informed by public data sources, applied to human capital to make work better. Mr. Kaplan is an Alchemist Accelerator (https://alchemistaccelerator.com)

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1304301 2018-10-04T16:00:06Z 2019-03-11T19:42:28Z An Interview with Na’ama Moran, CEO of Cheetah, Alchemist Class 2

    Na'ama Moran came to the US from Israel to study economics, math and political science at Cornell. After school, Na'ama joined NYC’s emerging markets hedge-fund, Greylock Capital Management, as an analyst. She left finance to pursue her dream of building products that make people's lives better with technology. She moved to Silicon Valley where she concurrently took classes in Computer Science at Stanford and co-founded Zappedy, a services platform enabling local businesses to close the loop between online marketing and offline sales. The company was acquired by Groupon in 2011. While working at Zappedy, Na'ama encountered a large variety of restaurant owners and food entrepreneurs. She discovered the hardships of running a restaurant and was surprised by the lack of transparency and ease-of-use in such an important marketplace. She decided to do something about it. Na'ama met cofounder Peretz Partensky while camping together at Burning Man. The two started working on what would eventually become Sourcery and raise $5M in funding. Her experience at Sourcery  led to her founding Cheetah Technologies to be the easiest, fastest, and most affordable way for small-medium businesses to get their daily supplies and services. In her spare time, Na’ama loves to practice yoga, hike the beautiful Bay Area trails, and read science fiction books.

    What exactly is your startup bringing to the marketplace today?

    My company today is like an Instacart for small businesses. We enable businesses to order their daily supplies from their mobile phone, anytime and from any place, and connect to a large network of local and national wholesale suppliers.

    What was the impetus behind starting that? What made you think this is a good idea? What was the inspiration behind this venture?

    I've worked with small businesses for the last couple of years, initially with restaurants in my previous business, Sourcery. What was really interesting about this market is the lack of transparency and the lack of a convenient way for small business owners to manage their daily purchasing and know product  pricing in advance. The way they manage their businesses is very antiquated. By accessing wholesale suppliers that are priced transparently on our app, and building this alternative supply chain, we’re enabling small businesses to have access to both local and national vendors, and benefit from a very convenient same day or next day delivery.

    Can you talk a little bit about your background before the startup?

    I worked in finance in a hedge fund for a couple of years right out of college. Then I moved to the Bay Area and I've been doing my own startups since then. For the last couple of startups  I've run, I've been working with small business owners primarily in the food service space. That gave me insight into the types of problems they were having.

    Is there any previous experience or situation, either personally or professionally, that you felt helped prepare you for this startup? Was that working in finance or working with food services? Is there one thing that helped prepare you for what you're going through today?

    I don't know if there was one thing. I think it's the connection of all the different businesses I’ve been doing for the last ten years. All of those startups taught me something different about finding product-market fit, building a scalable business, building and scaling a team. At my previous company Sourcery, which is the company that was enrolled in Alchemist, is when I got most familiar with the problems of small restaurants and small businesses in the food service space. It gave me deep familiarity with the problem and the impetus to come up with a solution.

    On the topic of Alchemist, what made you apply to Alchemist?

    I really like Ravi and his focus on the B2B space.I thought they had a very strong network of mentors.

    Now that you've gone through Alchemist, what do you think was the most valuable thing you took from going through it?

    It has a very strong network of mentors and alumni that is valuable for early stage startups. Especially people who are creating very large businesses in the B2B space and have a lot of knowledge and experience to share. The preparation for the demo day was very useful as well.

    What is the most challenging matter you guys are currently facing? Fundraising, talent recruitment, product development?

    I think recruiting in the Bay Area continues to be a very challenging endeavor, because the environment is so competitive. I would say being able to recruit top talent continues to be our biggest challenge. Our business is operations heavy and therefore, the various challenges we are facing have to do with scaling operations.

    Can you talk through one of the highest highs and lowest lows of the last month?

    We've grown our topline by more than fifty percent on a quarterly basis, compared to last quarter. This is definitely one of the highlights. One of the low moments we had, had to do with  recruiting. We gave offers to people that we really wanted to bring onto the team and they we were not accepted. This was pretty disappointing.

    Looking to the future, what constitutes success and what are your goals in the next twelve months?

    Being able to meet or exceed our goals would be a strong indication that we had a successful twelve months. We have certain projections and they're pretty aggressive so being able to, as they say, “meet them or beat them” would be really good.

    What entrepreneurial lesson or skill do you think took you the longest to learn or are you still continuing to work on?

    I think there is a skill in finding product-market fit. Unless you get lucky, you need to develop this skill in a very methodical, focused way. I believe I have been able to develop this skill over time, but I'm sure there is still a lot to be learned. Today, with my current company, I think we have a proof that we have found product-market fit and the biggest challenge is to scale the business very rapidly and be able to confront very strong competition in our markets. The challenge is different. The challenge is really about scaling a business and being able to sustain it, rather than figuring out if we have product-market fit.

    And so if you could hypothetically go back to yourself on the first day of your startup, what advice would you give yourself?

    Be able to let go of bad ideas and bad people faster.

    Is that similar to the Silicon Valley saying, “Fail quickly, fail often”? Is it better to get through a bad idea and move on to something good than to hold on to it?

    Yes. Being able to let go of bad ideas or bad strategy or bad people a lot faster probably would have made me successful faster than I have been.

    Do you personally have any advice for founders who are not from the US?

    It’s all about the network you build here. For people who are not from the US, it might be a little bit harder to build their networks. Being able to build a network as fast as possible is probably the biggest advice I can give.

    Has there been anyone specifically that helped you get to where you are today, that you think you wouldn’t be here if it weren’t for them?

    There are various people like that. Some of my investors have been incredibly supportive and informative in helping me to get where I am. There have been people I work with and colleagues that have been instrumental in helping me get to where I am today. I don't think there is one person. There are multiple people, between investors, colleagues and mentors, that I can point to.

    How did you get in contact with soe of these people and develop that relationship? That is something a lot of founders struggle with, building networks and trying to get to know these people. They find it really hard.

    It’s a good question! It's just a matter of always trying to make connections or initiate meetings. Even if the meeting doesn't necessarily work out to provide you what you want, ask the person to introduce you to other people that could be useful. Just constantly build that network with every meeting that you have. Be able to build a network through friends. I went to Stanford for a certain period of time, I met some people there. I went to Alchemist and YC, these are networks I am a part of. All these different organizations are ways to build those networks.

    Of all the jobs you can have, startups are more on the intensive side. The types of people that start companies, tend to have a passion for it. For you, whether it be five or ten years from now, what constitutes success for you personally and this venture? What would make you feel this was all worth it at the end of the day?

    I think it would be the impact I end up having on the lives of my customers and employees. Hopefully, I will see some significant monetary return for my efforts as well. I'm doing this  to really have an impact and change the way people are doing business, and change the way our employees are living their lives. Creating wealth for both my customers, employees is my number one goal and inspiration.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures/year. Learn more about applying today.]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1325760 2018-09-27T16:00:03Z 2018-09-27T16:00:04Z An Interview with Scott Raney, Managing Director, Redpoint Ventures

    Scott invests in entrepreneurs at the seed, early and growth stages with a focus on cloud infrastructure, open source and SaaS. He’s especially interested in the rise of distributed computing and developer-facing businesses. Scott serves or has served on the boards of Guild Education, LaunchDarkly (an Alchemist company), Hashicorp, Platform9, Sourcegraph and Twilio, and led Redpoint’s investments in Stripe and Collective Health. Past investments include adap.tv (acquired by AOL), Cloud.com (acquired Citrix), Heroku (acquired by Salesforce), Jumptap (acquired by Millennial Media), and RelateIQ (acquired by Salesforce).

    Prior to joining Redpoint, Scott was responsible for new products at NorthPoint Communications, a data CLEC providing nationwide DSL services. Prior to NorthPoint, Scott worked at Bain & Company helping clients in the private equity and technology industries.

    Scott, how did you get into the world of Venture Capital?

    I’d worked as a developer, product manager, and business development manager at a variety of companies including a couple of startups. I had a passion for entrepreneurship and technology, and I had an opportunity to join Redpoint as an associate a number of years ago. I’ve been lucky enough to get promoted a number of times and be in a position to work with a lot of really great entrepreneurs over the years. It's been a lot of fun.

    You said you were a developer. Is that what you graduated college with?

    I graduated with a B.S. in Electrical Engineering and had done a bit of software development as a part of my academic career. Then I joined, what at the time was called Andersen Consulting, but is now Accenture, as a software developer and, among other things, worked in their Advanced Technology Group. I did a lot of software development there at the dawning of client-server, and also got exposed to networking and communications and really fell in love with that.

    Is your background in software development what led to your investment in LaunchDarkly?

    I'm going to take it back a few years to 2007 and the launch of Amazon Web Services. As a former software developer, I saw the impact that would have on development, but also the emergence of this trend called DevOps, that we all know and love today. I met the founding team of Heroku, which was building the first PaaS (Platform as a Service.) Through that experience, I developed a deep admiration for entrepreneurs working on building products that developers love. You’re not selling products to developers, but you're selling through developers to organizations to solve big business problems. Heroku is near and dear to my heart and I learned a lot about the power of developers through that time. After that, we invested in companies like Stripe and Twilio and another company called Sourcegraph that's working on “code intelligence” again to help developers accelerate writing software. Through these experiences I was lucky enough to meet Edith and hear what LaunchDarkly was doing. It felt like it was the perfect continuation of that trend. It’s a piece of technology and a solution that helps developers, but ultimately unlocks so much value across an organization and could have a profound impact on how they think about their business.

    What separated them from the other investments you were thinking of making in the space?

    The things I look for when we find these developer-facing businesses are indicators that the projects have impact not just within the development organization, but with other functional areas. By changing the software development lifecycle, these companies can end up having repercussions that affect product, marketing, and even senior level decisions how a company runs its business. LaunchDarkly was an amazing example of that, through the idea of feature flagging: the ability to transform the velocity at which you could release product; the ability to give product managers control to deliver specific features to individuals; the ability for marketing to be able to provide early looks on functionality. These are interesting, profound capabilities that span across an organization. Maybe the most exciting thing to me is, we talked to one of their early customers during the due diligence. It's a very successful, large company today, a brand name. We talked to the CEO who was not only aware of the impact LaunchDarkly was having on the organization, but talked about how it impacted the way he managed the business. It changed the way he thought about what his team could do. I was incredibly excited when I heard that, because that’s the way you create massive value and have the opportunity to build a significant business.

    What are your thoughts on Alchemist in general?

    I love what Alchemist is doing. I think it’s clear that when Alchemist got started, there was a dearth of opportunities for entrepreneurs thinking about enterprise businesses to find mentors and advisors and organizations that could them to help them grow those ideas.  Ones that understand the nuances associated selling to enterprise buyers. There were things like this available to consumer and more consumer-like enterprise businesses, but there were very few people that could act as a resource for entrepreneurs who wanted to build traditional enterprise businesses. I've heard time and time again from the people that go through the program just how much value they're getting out of it. I don't want to suggest here that building a consumer business is easier than building an enterprise business, far from it. They're very hard, but they're very different. As a young entrepreneur, when you think about selling to businesses, there's some realities you just have to know. You have to understand what it means to build an enterprise-grade product. You've got to understand what it takes to market to enterprise buyers, and you have to understand what it takes to build and manage a sales force that can sell to enterprise buyers. Having an organization that helps young entrepreneurs understand the importance of all those things and what it means to do that is invaluable. I view it as a pretty unique entity in terms of what it's doing. The entrepreneurs that have been a part of the program say it was incredibly helpful.

    What’s the size of Redpoint, and how does it compare to other funds of similar stage in the Valley?

    We’re a unique animal in that we are always actively putting money to work out of two funds simultaneously. We have an early stage fund that is $400M focused on Seed, primarily Series A and occasionally Series B. We also have a $400M early growth fund that is focused on Series Bs and Cs. As a result, we span from Seed all the way through mezzanine financing with these two funds totaling $800M.It makes it a lot of fun for us. Our approach in the way that we we work with entrepreneurs, is they do not need to worry about which fund the money is coming from. Here we're going to work every deal exactly the same with an identical approach to thinking about engagement with entrepreneurs and the value that we want to add to them. We just have two pockets we can pull from.

    What size checks do you typically write and how is that structured?

    It's a hard one to answer given our stage-agnostic approach.  We write seed checks of a few hundred thousand to grow checks well north of $30M. The most important thing for us is to not try to force an entrepreneur to raise an amount of money that isn’t in the best interest of their company.  Ultimately, we want to do what is in their best interest and the good news is we have the flexibility to support a couple of smart people with an idea all the way up to a company well on its way to an IPO.  

    What stage do you prefer to enter into, if there is a preference?

    The earlier we can be involved with great entrepreneurs, the better, but again we are primarily interesting in working with great companies regardless of stage.  

    Does your fund have a specific focus?

    Broadly speaking, Redpoint invests in disruptive ideas across both enterprise and consumer technologies. That being said, with the rise of things like artificial intelligence and what's happening within SaaS and cloud, we're finding ourselves moving into adjacent markets. We've been spending time understanding how things like machine learning can transform the drug discovery process and the delivery of healthcare. We are spending time in areas like space and robotics. We have a pretty wide aperture. The common denominator is we are looking for bold ideas.  Companies that are building innovative technologies and that have the chance to fundamentally transform a market.

    How do you think your fund differentiates itself from other funds?

    First and foremost, it starts with entrepreneurs. Few jobs are as challenging as that of a founder creating and scaling a business; our team’s job is to work collectively for our founders and help them build successful companies. We view ourselves as going to work for the entrepreneurs, as opposed to them going to work for us. It’s a privilege.  

    As a firm, we’re very collaborative in nature and we take a team-based approach. Most of our team have been former operators or founders ourselves and we have a deep empathy for the entrepreneur’s journey. We try to operate like a startup ourselves with a small and nimble team. Our firm’s 19 + year legacy gives us a fair amount of experience, perspective and connections, as well as a foundation for doing what’s right for the entrepreneur.   

    The last thing I would say is that we really have deep domain expertise and we invest a lot of time and energy in building the networks and relationships around the thematic areas we invest to make sure that we can make a difference. This allows us to see over the horizon, and help our companies do the same.

    How do you think you individually differentiate yourself from other VCs?

    I try to be the best possible partner that I can be. I've been lucky enough to be a part of a lot of great companies and to have had a chance to work with a lot of great entrepreneurs. I hope that when they sit down across the table, they'll say “This is somebody who helped me, who had my best interests at heart, and who was great to work with.”

    The other thing is just try to be a good human being. This is a long term relationship and we’ll be working with these folks for many, many years. The last thing that an entrepreneur needs is to be dealing with somebody that isn't 100% aligned with them and has their best interests at heart. I try to make sure that I'm always looking at the world through their eyes and trying to be as helpful as I can.

    What makes an investment compelling for you?

    It starts with the team. We spend a lot of time in our diligence process assessing whether or not we think a team has the opportunity to build something really differentiated and transform whatever market or industry they're part of. That is top of our list, bar none. We want to work with good people that we think are going to do things the right way. Second, we look at the markets the companies are operating in. We want to be going after big markets and taking bold bets. The last thing is we look for products and technologies that are differentiated and will create defensible moats making  it difficult for other people to replicate.

    That used to stand primarily on the basis of high quality products and good technology. Increasingly, a lot of businesses we look at have other moats like network effects that can be extraordinarily powerful for businesses. In enterprise increasingly there are communities that get built up around some of these technologies. We put that all together and try to find things that are special and where we feel we can add value.

    Bottom line is, we want to work with great people, and they come in all different shapes and sizes and all different experience levels. We've been fortunate to work with a lot of folks who are building amazing businesses as their first job. We've also been very fortunate to work with experienced executives who are doing it for the second, third, or fourth time. In the end, we don't think that talent comes in one shape or size or profile. At some level, to be a great entrepreneur, it’s some magical combination of intelligence, grit, determination, and experience. There's always a different combination of all those things, but in the end we think that people that have a vision for the future and have the ability to get it done are what matters the most.

    Is there was a piece of advice that you could give to founders fundraising, that doesn’t get shared enough, what would it be?

    The more honest and open and transparent you are, the more likely you're going to find somebody who is investing for the right reasons. I encourage everybody to make sure that you're not trying to manage the conversation. As an entrepreneur you need to be able to sit across the table from your investor and lay it all out there - the good and the bad - and get an honest reaction. It gives me great comfort when founders name the issues or challenges in their business because I don't feel like I'm being managed and I don't feel like there are things I don't know. Obviously, things are not always going to be going up and to the right. Every company has things that need to be worked on. Once I know what the issues are, it's much easier for help the entrepreneurs. There are a number of founders in these conversations that feel like they need to come off as infallible and “we've got this, it's all good.” No business is like that.

    Which investment are you most proud of and why?

    I love them all the same! But Heroku is special to me because it was my first investment.  It wasn’t obvious at the time, but I loved the founders and their vision.  Seeing their success was incredibly gratifying. As with all our founders, I am forever grateful to have had the chance to work with them.  

    What areas are you excited about now and in the future?

    It's a broad question and I don't think I'll be exhaustive in my answer. I will tell you where I spend a lot of time personally. I believe in this move-the-cloud-native movement - this move away from traditional monolithic to microservices and from on-premise to the cloud.  These moves are having profound repercussions it has in terms of software development, deployment, and operations, and also the impact it has on a company’s ability to move faster than ever through software. You can look at every tier of the application stack and realize that they're going to be fundamentally changed. Many already have been, but there are many things left to do. I'm a big believer in things which help organizations move to the cloud. I’m a profound believer in the power of the public cloud and the long term trends there. All the solutions that help companies begin to make that migration, I'm very excited about. We continue to be interested in SaaS in the way that it’s moving beyond broad horizontal applications and into more vertical solutions that do more than just automating a business process, but really help people do their jobs better by delivering insight. We continue to be excited about the long term trend trends there. And as I mentioned earlier, we're very interested in broad applications around AI and ML and in particular how these technologies might disrupt industries typically not addressed by venture capital.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1323352 2018-09-20T16:00:04Z 2018-09-20T16:00:04Z An Interview with James Cham, Partner, Bloomberg Beta


    James Cham is a venture capital investor with Bloomberg Beta, a firm focused on investing in the future of work. James invests in companies working on applying machine intelligence to businesses and society. Prior to Bloomberg Beta, James was a Principal at Trinity Ventures and a VP at Bessemer Venture Partners, where he focused on consumer services, enterprise software, digital media; and served on the boards of CrowdFlower, Open Candy, LifeLock, ReputationDefender, Sonic Mule, and BillShrink. He was previously a management consultant at The Boston Consulting Group and a software developer. James received an MBA from MIT's Sloan School of Management and Computer Science degree from Harvard.

    How did you get into the world of Venture Capital?

    After the startup that I was a part of got acquired, I went to business school. A good friend of mine introduced me to a firm called Bessemer, where I got my introduction to venture capital and how I ended up investing in startups.

    And before Venture Capital you were a software developer?

    That's right, I was a software developer in the late 90s to early 2000s. I was part of that transition from client-server over to web-based, enterprise applications, and I wrote a bunch of mediocre code and made a bunch of bad design decisions that other people suffered for as a result. So I’ve been through enough cycles to least understand what that feels like from a potential customer perspective.

    Why did you invest in LaunchDarkly?

    Let me take a step back. When we raised money from Bloomberg to start the fund nearly five years ago, one of the core claims was that we are living in a world where everyone's a knowledge worker. In that world, we should look at the best knowledge workers around. We should copy their techniques to find ways for them to scale what they're doing. And of course, the best knowledge workers in the world are software developers. This is in part because some of the best software developers are a mix of lazy and smart -- they spend all their time avoiding working on applications and instead work on frameworks and systems infrastructure. So broadly, that is what we’re excited about.

    LaunchDarkly is exciting for two core reasons: One, there was an immediate sense of recognition of a problem. When I first heard Edith pitch the idea, I thought “Oh my goodness! I wish this existed when I was being yelled at as a software developer or when I was managing projects.” There's a sense that this should exist and this is the right way to do something. I think most software developers do this. You build your own bad bug-tracking system or slightly lame issues-tracking system. And I had done something like a features flag product for some other project, but I didn't call it that. There was a sense that Edith understood this and saw this more clearly than I did. That’s one excitement.

    And then there's the other reality which is the excitement of seeing a leader like we did. There's a point when you meet her and say, “Oh, she's not just someone who has built something interesting, but she’s someone you can see leading something important.” That’s another important part of what made it exciting for me. As I've gotten to know her better, that’s only been validated more and more.

    You met LaunchDarkly through Alchemist. What are your thoughts of Alchemist in general?

    The thing that is most helpful about Alchemist is that it’s more systems driven. The people around it are quite credible and thoughtful. You look at the set of advisors: These are people who aren’t really famous and lightly involved, but rather accomplished and very deeply involved. From my perspective, that makes the process of diligence and validating people much easier.

    There’s always a sense about Alchemist that you’re being as positive as possible about the opportunity, but at the same time you don’t lie. That's an important thing for an investor and really helpful.

    What is the approximate size of your fund? How does that compare to other funds in a similar stage?

    As the markets are fragmented, even in the earlier stage, judging how we compare to other funds does become more complicated. But the core physics of our first fund was $75M, and the second fund is also $75M. Our first check sizes range between $100K to $1M, and we participate anywhere from friends and family rounds to right before the Series A.

    Does your fund have a specific vision or focus? I know you've touched on the future of work prior, but is there more to that?

    We talk about the future of work, in part, because historians of science would say that it takes two generations of managers for any new technology to really make an impact on the economy. At the start of our fund, we were twenty years into the Web -- networked computers, which is another way to think about it. We were convinced that it is only now we’ll see massive changes in the way people work, because now you have a bunch of people creating businesses that are suited for the Web.

    Within that vision, we have a focus both on productivity for knowledge workers -- we see a lot of opportunities to integrate and learn from developers -- and the way software ends up changing the way that people do business. New tools will be required to support this new kind of business, which include developer tools up to enterprise software.

    We also believe that machine learning, model building, and AI in general are different than normal software development. I think they have profound implications that we haven’t understood yet, not just on all the cutting edge research we’ve done, but especially around the way that people make good software and machine learning models. Machine learning model building is different than software development. The economic characteristics are different, meaning machine learning will give rise to new business models. So somewhere out there, there’s going to be a person that is the Bill Gates or Marc Benioff of machine learning. They are going to do a mix of marketing, technical, and product insights and come up with a different way of providing machine learning or AI-driven businesses in a different light. They are going to charge in a different way or sell it in a different way. That’s the innovation or change in the way that people do business that we’re most excited about, and where we spend a lot of time.

    How does your fund differentiate itself from other funds?

    On the one hand, the money is a commodity. The money is the same, and so the way you differentiate is you bundle different services along with it. Some of that is the personality of the partners and the way that they relate to other people. A part of that is also a set of things that we focus on. I think, we think through more than other firms ways that founders can make a dent in the universe through the way they talk about themselves. On that side, we’ve thought a lot out. And we work with our companies a lot around that.

    So much of it depends on the specific relationship that each partner has with the founder that that investor has invested in, especially at the seed stage. There aren’t magic formulas.

    How do you individually differentiate yourself from other individual VC’s?

    The right way to compete along those lines is not to compete. Instead, I’m most interested in angles that people aren’t thinking about yet. And I’m most interested in thinking through angles that are poorly understood.

    So if someone has just another generic SaaS company that’s growing at a certain percentage, then I'm probably not the right person for them. An old friend of mind would say that there’s two types of VCs. There are VCs that if they weren’t VCs, they’d be bankers, and others who are VCs because they spent too much time pitching. I’m definitely part of the second camp. There are a whole set of ideas that should be enabled and would be if someone stuck their neck out and said they believed this founder could create something special and make the world better. And that’s what I try to do.

    ​What makes an investment compelling for you? Is there something in particular that makes an investment more compelling than not?

    There are all the things that people talk about: traction, the team’s experience, potential, etc. I think those things are all really important, but the thing that might be under appreciated is that core insight. Sometimes the founders don't understand what the core insight is. There is nothing quite as exciting as sitting with a founder and discovering together what actually makes them special. And oftentimes that core insight can be communicated in a paragraph or it could take a lifetime to get there. For me, that’s what I'm looking for that. It’s going to be in areas where I have enough preconceived notions that someone could surprise me.

    What is the number one red flag for you that would make you pass on an investment?

    The moment I feel like I can’t trust someone is probably the number one reason why. When it’s close or we thought we should have invested, that tends to be the number one surprising thing about most folks that we pass on. Investing in a company is not something you take lightly. We take it very seriously and it’s a relationship we take very seriously as well.

    What separates the great founders who get an investment from you vs. the good founders who don't quite make the cut?

    There’s a way in which the best founders help you believe. Whether it’s helping the investors believe or first customers or the first employee or the co-founders. And that way of getting someone to believe, it comes in all sorts of ways. It’s not generic. It comes in many sizes and forms, but that ability to impose your will on the universe. It only works if you can convince other people.

    Would you be more likely to fund a very experienced team with a mediocre idea or a team of novices with an amazing idea?

    Nuance matters a lot here. I think that there are plenty of times when the very smart, experienced team can take a mediocre, initial idea and because they are so customer-oriented or technically visionary that they end up building something better, smarter, or more interesting. However, generically, I hunt for people who have extraordinary insight and how they get there. The insights do not have to manifest themselves with the first product, but they manifest themselves somehow that makes them extraordinary.

    Is there any piece of advice you would give founders who are fundraising that you think does not get shared enough?

    I think founders forget how much power they have in a situation. There are cycles that founders get in where they end up feeling like this is just another boring sales call. But what the founders are doing is they're sharing their most precious things. They're sharing things that they probably care more about than almost anything else in the universe. When they pitch, they should treat it that way. That investors are lucky to get a view into this. The moment the founder forgets that, humans can smell it. You have to continue to be resilient and continue to believe because investors, although we do it through a financial instrument, at the core, we’re declaring we have faith in someone and we have enough faith that we’re putting our money and our goodwill behind it.

    If you think about Edith and the way that they were together and the way that they communicated and seemed to take what they do seriously, even when things are difficult, that’s the sort of thing that an investor is looking for.

    What areas are you excited about now and in the future?​

    I’m excited for when things that we call AI-related start being machine learning-related and get boring. When everyone understands how to engineer a bunch of problems, things get boring, and that's when you end up with a lot of product innovation. I’m very excited about that!

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    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1311933 2018-09-13T16:00:04Z 2018-09-13T21:59:53Z An Interview with Edith Harbaugh, CEO, LaunchDarkly, Alchemist Class 8 (Ocho)


    CEO and co-founder of LaunchDarkly Edith Harbaugh has raised over $30M in funding from investors at Uncork, DFJ, and Redpoint. She has more than 10 years of experience in product, engineering and marketing with both consumer and enterprise startups. Edith was Product Director at TripIt, where she launched TripIt for Business and ExpenseIt. She holds two patents in deployment. Edith earned a BS, Engineering from Harvey Mudd College and a degree in Economics from Pomona College. She enjoys trail running distances up to 100 miles.

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    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1314938 2018-08-30T16:00:05Z 2018-09-13T22:00:34Z Making Outbound Sales Work


    First impressions matter. When you're a startup, a single email with the right message can lead to a lighthouse customer or a new investor. Yet because so many more cold emails result in no response or outright rejection than engagement, frustrated founders simply quit sending them. They shouldn't.

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    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1313813 2018-08-23T16:00:04Z 2018-09-13T22:00:52Z Building a Talent Culture: Why You Need More Than Good Ideas and Funding

    Great leadership is the difference between success and failure. It's why some good ideas take off and others don’t. To run a successful startup you don't necessarily need to be a brilliant leader, but you do need to know how to access the brilliance of your team.

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    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1310473 2018-08-16T16:00:01Z 2019-05-24T21:54:39Z 5 Tips To Help You Navigate The Procurement Process Like A Pro

    As a founder and mentor, I begin each week with pipeline meetings and the question: “What are the barriers to close?” I teach this method to Alchemist startup founders to help them identify the barriers that can stall each deal. Too many first-time founders provide a forecast to potential investors without allowing for the possibility that procurement may stall or kill their deal. A deal is not done until it is signed. Here are 5 best practices that will help you navigate the procurement process like a pro.

    Tip 1: Know Your Path To Close

    Your buyer approves the “budget” but doesn’t approve your Vendor Status. “That’s Procurement’s job,” they say. This is a key point: they are different departments. The Path To Close means understanding the buyer’s decision making process AND Procurement’s new vendor setup process and requirements. Any delay in the new vendor setup process will stall your deal. Understanding the procurement process and barriers will reduce the time it takes for your deal be executed by weeks.

    Tip 2: Remove the MSA Landmines that Stop You from Getting Your Vendor Status

    The procurement New Vendor process could take months. Founders must factor this into their forecast. Don’t forecast a deal to close in 30 days if the procurement process takes 90 days. Since our goal is to help early stage startups close faster, consider using your client’s Master Service Agreement (MSA.) This document can reduce the friction getting your deal signed. All deals have key sections that need to be negotiated, like IP ownership, indemnification, payment terms and cancelation. All of these terms will be in the MSA, so it will save you time and legal fees to redline your client’s MSA.  

    Tip 3: Understand Data Ownership and Data Security – ISO 27001, ISO 27017, ISO 27018

    Some deals you will have to walk away from, because you are not able to pass their Data Security requirements It is important to know data protection requirements as early as possible in the sales stage so you don’t waste cycles. For example, If you don’t have independent verification of security, privacy, and compliance controls, through achieving certifications, you will not get vendor status. A great resource for you to learn about ISO security is Google Cloud, which does a good job clearly outlining data security requirements. Here is the link for your reference.

    Tip 4: Build a Relationship with Procurement

    Deals are done between people. Never underestimate the power of a human relationship. Ask to be connected with the procurement lead who is responsible for your deal. Procurement teams negotiate hundreds of deals a year. They can tell you what barriers will kill your deal, and set the legal review timeline.

    Tip 5: Pro Tip: Factor in Legal Team Bandwidth and Planned Vacation (PTO)

    Don't be surprised when you are told that the legal team is slammed with other deals, or on vacation for the next month. This delay may not seem like a big deal to them, but it stalls your deal and can have a waterfall effect on your quarter and fundraising roadshow. If you know this, you can plan for it. So ask your procurement lead what outside factors could delay your deal from getting signed in the current quarter.  

    About Darren Kaplan


    Darren Kaplan is the co-founder and founding CEO of hiQ Labs (www.hiqlabs.com), a data science company, informed by public data sources, applied to human capital to make work better. Mr. Kaplan is an Alchemist Accelerator mentor, working with Augmented Reality, Cyber Security, and HR enterprise SaaS startups.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1310212 2018-08-09T16:00:05Z 2018-08-10T02:57:51Z Seed Fundraising - How to get “Reservations” from Angel Investors


    At the beginning of your seed fundraising process, you may have to wait several weeks for the first “yeses” from any investor. During this time, if you’re not getting any commitments your round can appear stagnant. Reservations from Angel investors can help solve this problem; as your round’s availability decreases it will put pressure on other investors to say yes.

    Here’s how to secure the reservations:

    Ask for Money

    Most Angel investors turn down 90% of the meetings founders request, so if you get a meeting, you must directly ask if the investor is interested in investing.

    Steps:

    1. Wait until 10 minutes before the end of the meeting, then ask if they have any questions. For example:

    “That’s a quick overview of AcmeCorp - do you have any questions?”

    2. When you’ve completed the questions and/or when there’s 5 minutes left, ask if they want to talk more about investing. For example:

    “Does AcmeCorp fit within your investment thesis?”

    “Is this investment something you might like to be a part of?”

    “Would you be interested in investing in our current round?”

    Ask Usual Check Size

    If the investor expresses interest, the next step is to find out their usual check size. This will be an integral part of the reservation later.

    Steps:

    1. After the investor expresses interest, ask about their investment process, as this will give you an idea of the time they take to make a decision, as well as their usual check size. For example:

    “What’s your usual process for investments like this?”

    2. If they don’t reveal their check size, you’ll have to ask directly. For example:

    “What’s your usual check size for these investments?”

    “What size of investment are you considering here?”

    “Do you have a fixed amount you usually invest at this stage?”

    Secure the Reservation

    Once you know the investor’s potential check size and when they will decide (roughly), it’s time to secure the reservation.

    Steps:

    1. If the investor’s check size, decision timeline, and other requirements fit with your plan, tell them you’d be open to having them involved. For example: “I’ve enjoyed our conversation and your approach seems to fit with our current raise”

    2. Next, acknowledge they will need time (and perhaps further materials) to decide and ask for the reservation. This step is critical. For example:

    “Should I hold that space for you while you’re deciding?”

    “I will hold your spot, to give you some time to decide.”

    “I usually hold space for investors while they’re in diligence, I’ll do the same for you.”

    Once you’ve promised to reserve space for an investor, it would be wrong to give that space to another investor without fair warning. Thus, your round’s availability is reduced and all other potential investors start to feel the pinch of FOMO (fear of missing out). When new investors now ask for your fundraising status, you can respond with spoken for availability for example:

    “We’re raising $500k and have 50% spoken for”

    Practice these phrases before the meeting, and the early part of your seed fundraising will be much easier.

    Thanks to Kaego Rust for her help on this article.

    About Ash Rust

    Ash Rust is a Partner at Alchemist and the Managing Partner of Sterling Road. You can find more of his writing about Seed Fundraising on Medium.

    About the Alchemist Accelerator
    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1304972 2018-08-02T16:05:29Z 2018-08-02T17:00:02Z An Interview with Toni Schneider, Founding Venture Partner, True Ventures

    A Swiss native who studied computer science at Santa Barbara City College and Stanford University, Toni Schneider started his career as a software engineer working on NASA virtual reality simulators. He went on to become a startup founder and CEO, and an executive at Yahoo!, before joining the True team as a founding Venture Partner. Toni is well known for his role as CEO of Automattic, the company behind WordPress.com. He helped WordPress become a globally known brand that powers over 30% of all sites on the internet. For his work, Toni was recognized at the Crunchies as CEO of the year.

    When he is not running one company or advising another, you can find Toni in his VW van crossing the US with his family, coaching San Francisco Little League baseball, or tinkering with old cars.

    How did you get into the world of venture capital?

    I got into it first as an entrepreneur and founder, raising money from VCs. I did that for three startups. Then I switched to VC while also still being CEO of a startup. True Ventures is the only VC firm I’ve ever been with. One of True’s co-founders, Phil Black, was a close friend of mine. He was thinking about starting a new VC firm and asked me if I would be interested in being part of it. So when he started True together with Jon Callaghan, I said yes and dove in to learn from them how to raise money from limited partners and make venture investments as we pulled together True’s first fund in 2006.

    That’s so interesting to be on both sides. You began on the entrepreneurial side pitching to VCs and now you are a VC. How do you think that transition helped prepare you? Does it help you identify what you are looking for in a company that you want to fund? What a red flag would be, that sort of thing?

    It's probably both good and bad. The good part is that I was able to bring a founder’s perspective to how we structured True. Our goal was to be very founder friendly. I could share honestly what it was like to sit on the other side of the table from a VC. That helped in creating a firm where we really think of founders and entrepreneurs as our customers and where we do everything we can to provide a good service to them.

    Another advantage is that when I look at startup teams, I have a good hands on feeling for their abilities because I’ve run several startups and hired and managed many startup teams.

    The disadvantage is that it comes with biases. I had a certain experience as an entrepreneur and certain things that worked for me and certain things that failed. That very much shaped my thinking around startups. While it gives me a good point of view, I also have a harder time going outside of my own experience and being open to different approaches to starting businesses.

    What for you personally makes a startup look like a good idea? What is something compelling to you as a startup you would fund?

    For me it always starts with the team. I look for strong founder qualities, which in my mind are the ability to be very charismatic, and to have a really exciting, big, long term vision combined with flexibility when it comes to everyday execution that's going to be very zig-zaggy for a startup. There will be new challenges every day. So you look for somebody who's comfortable asking for help and being adaptable near term, but has an audacious long term vision that they don't waver from. The charisma and communication skills will help attract a lot of people to their startup.

    Finally, someone who has a lot of depth in their area of expertise. This is something I always look for. As I dig into an idea, do I feel, “Wow, this person is three steps ahead of me and has really thought it through and knows everything about the space they’re about to get into”? Any good idea is going to have more than one team chasing after it, and I want to bet on the team that has a lot of depth.

    There's a lot of emphasis for future founders on idea generation, but it honestly sounds like the idea comes second to more of the team, from what I just heard you say...

    First step is to be in the right place at the right time for your skillset. There are other factors that play into it, but without the right people, none of it is going to work.

    The second step is the product and the idea. The product needs to be unique and truly compelling and have a story that can be articulated in a simple way. What does the product do? Who is it for? What makes it unique? It's surprising how often founders can’t answer those three basic questions in a straightforward manner. I want to invest in a product that gets me personally excited, that I believe will have a positive impact on the world, and that will make customers say, “Wow, I want that, that’s different. That’s a totally new approach.”

    For the third step, like everybody else in the VC business, I look at the market. Is this something that if it works out - there can be a ton of risk associated with, frankly we want a ton of risk - but if it works out, could it be a very big business? Is it a big market that seems ready for a massive change? That has to be in place as well, otherwise you can have an amazing team with an amazing product, but without big growth and revenue potential it won’t be a VC scale opportunity. That's not what we’re in business for.

    What was the number one red flag that would caution you away from investing in a team or a startup?

    On the people side, it's teams that don't seem to have the right chemistry or the right understanding of what their roles are going to be, or teams that don't have a track record together. That for me is maybe not a red flag, but definitely a yellow flag.

    The biggest red flag usually comes up during initial due diligence. It happens quite a bit that I'll think “Wow, this is a really good idea, I'm going to dig in,” and when I do, I realize that there are already a bunch of teams doing the same thing and the idea quickly doesn't seem so original. It feels like more of a rehash or tweak of another idea. That usually throws cold water on a project for me. That’s the biggest red flag, that an idea isn’t that unique.

    It's only one percent of startups go on to become really big. You really do have to filter out ones that you don't think are capable or have a clever idea.

    Yes, and even when everything fits, even when you check all the boxes that I just described, it's still hard. Because nothing ever plays out exactly the way we plan and hope. Another filter we use at True is that we focus on one type of deal. We do two to three million dollar seed rounds. That’s it. If it’s something that is a really good idea with a good team, but two to three million dollars is not enough to get it off the ground or it’s already past the seed stage, we won't do it even though it might be a great opportunity. We are really trying to stay focused on one stage of investing, do it well, and have a whole portfolio of companies that go through the same stage so they can all learn from and support each other.

    Seems like True has a specific focus on seed round innovative companies, what else do you look for?

    We’re not thesis investors. We don’t have certain sector or certain type of business that we look for. We’re not a “SaaS fund” or a “Crypto fund”. We invest behind great founders and then double down when things are working. For example, we were early investors in Fitbit, a couple of years before hardware startups and connected devices became a trend. We weren't looking for that trend, we just liked that team and particular idea, and when we saw it working for them, we followed on with a bunch more hardware investments like Ring and Peloton. We follow wherever our founders take us. Recently, we've invested in robots, satellites, and biotech, which are all new areas for us. We try to be very open-minded about what the subject matter might be.

    You really do try to treat founders and startups that work with you very well. Is that how your fund differentiates from others? There are certainly quite a lot of VC funds around here.

    One thing that makes us different is that we invest earlier than the majority of VCs. We're really close to an angel stage, but we're a full service VC firm. We are there in the very beginning, often when it’s just two or three people with an idea, and we have our founders’ backs all the way through. Most VC firms want to see revenue traction and product-market fit before they even look at something.

    The second thing we do that differentiates us is we are focused on the personal needs of a founding team, not just the business needs. We know what you will need as a founder, as a leader, to get really good at your job, to get through the ups and downs of doing a startup. If something goes wrong, we want to be your first phone call. We don't want to be the kind of investor where you feel like, “Oh God, something went wrong, how do I break this to my investors? I don't want to talk to them.” We hope to have a trusted relationship so that even when things don't go well, we're going to be there and help you through it.

    Part of how we do that is to connect all the founders within our portfolio and they help each other improve. That's our founder network and platform. We have events and tools that facilitate direct, open, and honest collaboration. It’s optional, but most of our founders take advantage of this amazing peer network. I think it’s super valuable and quite unique among VC firms.

    What made you to want to invest in Laura and her startup, Atipica? What made them stand out from the pack of other investments you were evaluating at the time?

    Laura and Atipica really hit a lot of the boxes I mentioned earlier. She’s a very charismatic founder with a big vision, a great communicator with deep knowledge in the area of diversity, inclusion and hiring. She had spent several years working on the idea and product, talking to a lot of companies about their needs, so she had depth of expertise. We started working together a little bit over two years ago. It was still early days in diversity and inclusion tools and she was well ahead of many of the people we talked to. She had a small team, pre-revenue but she already had some pilot customers. So it was the right stage for us and we felt like our seed investment could help her build out her team, get the product launched, and get to the next stage.

    The hiring and recruiting sector in particular was interesting to us at the time. We had just had a successful exit to LinkedIn with Connectifier, and I was and still am on the board of another investment we made in this space called Handshake. They’re in the college recruiting space and doing very well. So I was personally excited about hiring tools and got quickly interested in Laura’s vision to make the recruiting and hiring process become more fair and inclusive and help companies understand why they're having such a hard time building diverse workforces.

    Is there any piece of advice that you would give founders who are up and coming next generation founders that you don't think get shared enough currently? Something that people are failing to focus on when they're thinking, “I want to become a founder”? Is there some aspect you see time and time again they forget and you would caution them to focus on?

    Try and get as much perspective as possible. When I was an entrepreneur raising money, I felt that I knew and loved my team and my business, and I could pitch them all day long. But when I went into VC meetings, I was new at it and had never heard any other pitches. On the flip side, those investors had heard tons of them, yet I had no idea how I stacked up. I've definitely seen founders come through True who think they nailed it but they didn't. And I’ve seen founders completely hit it out of the park with us and were like, “Was that OK? I have no idea!”

    My advice is to connect with other founders and see other pitches, or at least get some information on how high the bar is. I think that's how you get better. Don't try just work on your own idea, on your own pitch within your own bubble, but really try and see what else is going on out there, who's doing really well and connecting. How are they doing it? What's the subject matter?

    A lot of what you're describing was actually the impetus behind why Alchemist got started. The founder, Ravi, felt the same thing, a lot of startups didn't really know how to compare and weren't really swapping notes and sharing. Alchemist has become like a community where you can share ideas, help each other out and that everyone is trying to get the best out of everyone else.

    Exactly. The most worthwhile part of being a part of a program like that is learning from each other and getting perspective.

    Then the last thing I'm really curious about is seeing how you get to see all the upcomings startups, tech products and services. What areas do you personally think are going to be the most exciting and you are most excited about in the upcoming near future?

    I get that question a lot and actually I don’t know. Literally someone will walk through the door tomorrow with an incredibly exciting idea that we couldn't anticipate. All the super interesting things we have gotten really excited about are little bit out of left field. We're trying to be truly open to new people and ideas because our next great investment can come from anywhere.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1306513 2018-07-27T22:55:03Z 2018-07-27T22:55:03Z An Interview with Laura Gomez, CEO, Atipica

    Her family immigrated to America when she was eight years old and settled in the Silicon Valley area. Shortly afterwards, she got an internship with Hewlett Packard. No one at her internship looked like her, and she hated it; it made her want to stray away from tech. However, her parents — who’d come to the U.S. to make a better life for her children — saw that tech would be an incredible opportunity and pushed her daughter to continue. Determined not to let the industry make her into a victim, she decided she’d work in tech, “whether the industry embraced her or not.” She believes she made the right choice going forward with tech; now, years later, diversity is dominating the conversation in the industry. Since then, she’s worked at huge companies like Twitter and YouTube, helping them translate and localize their applications for a global audience. Her latest endeavor, Atipica, helps tech companies find and hire diverse candidates; says she’d rather fail trying to solve the problem of diversity in tech than to never tackle it. Laura has raised $2M in seed funding led by True Ventures.

    In order to get a more in depth look into Atipica and the mind that created it, we conducted an exclusive one-on-one interview with the company’s founder Laura Gomez. We pushed for answers to questions that people often want to ask Silicon Valley’s next-gen entrepreneurs, but seldom have the chance. By the end of this snapshot, we hope you have a sense of this amazing founder’s story and a few lessons to take away for yourself.

    What exactly is your startup bringing to the marketplace?

    What we bring to clients, investors and or our own team members is thinking of AI in HR in a more thoughtful and inclusive lens, powered by data and machine learning in the workforce. While there are many tools out there for HR, we are the only ones thinking of it as a holistic, inclusive solution and building it with a diverse team.

    What was the impetus behind creating your startup?

    The conference I just came from was actually MC’d by a former human resources business partner at Twitter. While technically I do not have any direct HR experience, I have worked very closely with HR throughout my career. Regarding the starting idea, it began with me thinking of a thoughtful and inclusive way that we can better understand diversity at the top of the funnel so that we can apply what happens to diverse employees and what doesn’t, and try to move away from anecdotal approaches to diversity and inclusion.

    What is the most challenging matter you as a startup are currently facing?

    I think the biggest hurdle is people not only picturing Atipica as a solution for social impact and diversity, but seeing it as a business intelligence tool that is adaptive to the dynamics of the workforce, which includes different genders, races, ages, and other kinds of diversity. The challenge is understanding the market outside and how to position ourselves, and getting people to not just thinking it’s a social impact and diversity solution, but rather that it’s a business intelligence technology that’s helping businesses adapt to what the workforce looks like now and what the workforce will look like in 5 or 10 years.

    Can you tell us a little about your background before you started your startup?

    I’ve been in tech since I was seventeen. I had my first internship at Hewlett-Packard, and since then went and studied in college. I didn’t really focus on computer science because I felt a lot of the imposter syndrome. After college, I joined a lot of early stage tech companies all at various stages of growth. While working at them I saw a need for more diversity.

    What previous experience or situation do you feel best equipped you for your current role?

    Growing up I always had a hard time assessing myself and my skills, but I also loved languages and loved reading about and interacting with new technologies. It wasn’t until I was in my late twenties that I realized that there was a natural intersection between the two, called localization. As I continued with my interests, I realized that technology could help me assess career paths and even help companies better understand the skillsets of people. That is something I want to incorporate into Atipica as well. How are people assessing themselves, how are they intersecting their skill sets with their own mindset and passion in the long run?

    If you could go back to the first day of your startup, what advice would you give yourself?

    Be patient with the fundraising process. Patience in understanding the complexity of what it takes to get funding is fundamental to becoming a founder. While people do usually want to be patient and not force it, the process requires a thorough understanding. It’s really not just the waiting that’s difficult, but you need to have patience in understanding the process.

    What made you apply to Alchemist? Why not others?

    A former coworker from Twitter is an Alchemist alum so I decided to consider it. I started researching, and I found Alchemist was considered the best accelerator. I then reached out to a friend who knew Ravi so that they could introduce me to him. The rest is history. Since joining Alchemist I actually made one of my closest friends by going through the program. She’s also an Alum. I saw the success of Alchemist, the prestige, the thoughtfulness of the program that Ravi had built and it made me think: “This is where I want to be.”

    What was the most valuable thing you took from being a part of Alchemist?

    Learning how to sell to enterprises. My whole career, I had only ever sold to consumers. I think the enterprise component allowed me to better understand all the components that make up enterprises in general. Obviously there’s an emphasis on revenue, but there’s also an emphasis on positioning and on the value to the client. Being better able to see through the lens of enterprises and how they look at startups was very helpful.

    Can you talk about a time in which you thought all hope was lost and how you made it through that?

    It happens to founders, if not every day, at least once a week or every month. This month alone it has happened to me twice. The main one had to do with someone that I thought was going to lead my round of funding, but it just got to a point where it just didn’t seem like it was going to work out. They had their own concerns about the business, and I had my own concerns about aligning myself with their values. I think it was one of those things that should have been addressed and discussed earlier on, but those are the types of things that happen, and I learned from it and have moved on.

    I personally am a big fan of acknowledging the things that I can’t control and then focusing on the things within my control, plus by doing that it helps me not go into a rabbit hole of “oh my gosh I can’t believe this happened” or “poor me” victimization. Since I’ve started focusing on that, people have noticed how much happier I am. I feel more in control of my life and my startup. Always make sure to be grateful for everything. Even for example if you meet with an investor and they decide not to invest, thank them and walk away with gratitude that they were willing to meet with you and that you were able to learn from that. Being grateful in life opens so many doors and will never hurt you.

    What entrepreneurial lesson or skill took you the longest to learn or are you still learning?

    All entrepreneurs, whether they know it or not, are going to face some sort of ethical dilemma. It might be who they take money from, what they’re building, who is it going to affect. I have had to learn how to handle those dilemmas and to stay true to who I am. This skill is especially important right now when we have big tech companies being held accountable for various intrusions of the democratic processes or how they’re building their product and their businesses. Practicing ethics and integrity is something that I continue to learn each and every day.

    Do you have any advice for female or minority founders?

    Yeah, definitely! I actually just met with a female venture capitalist this week to see if she had ever led a preemptive Series A round. I asked because I really wanted to know if it was true or if it was just my own bias, but I had never heard of a woman or a person of color that has been a part of a preemptive Series A round. That being said, I know many male founders that have recently closed preemptive rounds just by talking to an investor. I think we need to acknowledge the systematic discrimination — men can get a $10M term sheet from a coffee, but not female or underrepresented founders. How I stay balanced is knowing that I can only control my own company and my own strategy when it comes to fundraising and not any external factors like who’s getting funded and are they preemptive or not. However, if there is a trend where minority founders aren’t being treated fairly, you have to acknowledge it and hold the industry accountable.

    Has there been someone that has helped you along and that you don’t think you’d be here if it wasn’t for them? How did they do it? How did you find them? How did you build that relationship?

    Yes, it is a VC friend of mine named Freada. She was one of the first people I ever pitched to. When I pitched to her it was horrible. I wish I had recorded it because it was absolutely terrible. But all of the partners and associates actually gave me really great feedback. I met with her afterwards, and she told me to focus on what I really wanted to make and then to build that well and find people who are willing to buy it and then come back to them. I took her advice and seven months later met my lead investor through her. And her firm, Kapor Capital, became an investor as well. So I definitely wouldn’t be here without Freada.

    Did you already know her or how did you meet her?

    I didn’t know her. I actually just randomly reached out to one of the principals, who is now one of my closest friends, there at the VC firm that I kind of knew of. I reached out and I said “Hey do you have time for coffee?”, and she said yes, but asked me if I’d rather meet with her coworker Freada because she was really passionate about what I was trying to start. She eventually became my mentor and colleague and investor. As a founder, you need to be willing to just put yourself out there and ask to meet people.

    What constitutes success for your startup in the next 12 months?

    I want to build a company based on values, integrity, using AI and machine learning to coach people rather than trying to automate and replace people and their skill set. I want the world to know that not all tech companies are trying to replace people and that not all artificial intelligence is biased; and I really want them to know that there’s a company out there thinking of thoughtful and conducive ways to use this technology to help the current workforce.

    What constitutes success for you personally?

    Success for me is having a proud legacy to leave behind. No matter what happens, I have met amazing people who really believe in me and my mission. At the end of the day I’ve done great work and built something I really believe in and am proud of. I have two nieces and if they ever read about me and what I’ve done, I know they’ll be proud.

    Are there any insights you have learned that you want to share with the next generation of entrepreneurs?

    I would tell them to stay true to their convictions. Whatever you’re building, make sure to find a support system. Don’t think it’s a weakness or a sign of desperation to ask people for help. Make sure to ask people for support, ask for advice, ask for opportunities. I believe that most people out there are good people and are willing to help, and if they’re too busy and aren’t willing to help, then you shouldn’t take it personally. Don’t be afraid of rejections, but rather be thankful for each and every opportunity that you’ve been given, and that will make a big difference.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley — including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

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    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1303790 2018-07-19T15:50:43Z 2019-03-07T23:35:22Z Checklist for Running Your First Board Meeting


    A first board meeting is a big and life changing milestone. As founders, you survived weeks of due diligence, followed by a term sheet and then a wire of a few million dollars. Now it is time to be a CEO and experience and run your first board meeting with the investor or investors who sit on your board and blessed the deal.

    It can be overwhelming. Here are a few coaching tips, based on my experience as a board member, to help first time CEOs be prepared and maximize the limited time you have with your board.

    Checklist For Your First Board Meeting:

    • Get On Calendars: Executives’ calendars fill up months in advance. Remember that you are asking for 3 hours of a partner’s time, several times a year. In some cases, investors will have to fly in for the meeting. As a best practice, ask one of your board members’ administrative staff to own responsibility for scheduling the meetings.

    • Pick the Best Dates: The board meeting should take place after the quarter ends. This gives your finance and sales team enough time to close the quarter, giving the complete picture of sales data. Your cash runway is a key metric. Missing one deal could have a big impact. Having board meetings after the end of the quarter ensures you have the actual bookings number. (Note: most boards also have standing calls during the quarter.)

    • Share Decks: Email your board decks at least 72 hours in advance. This will help the board be prepared to ask meaningful questions and give feedback. Board members might also request that you pull additional information for the meeting. Emailing decks ahead of time gives you and your leadership team a few extra days to meet any such requests.

    • Use the Preferred Template: Ask the lead investor if they have a template that they would like you to follow. Chances are they sit on multiple boards and have a preference how they like to review the data. Once you have the template, share it with your leadership team. Have them fill out their section. For example, Sales, Finance, Product, Operations will each have their own slide or slides. Each section should start with a high-level overview of the insights and learnings of the quarter.

    • Prioritize Board Discussion: Always have two or three meaningful topics that you want to discuss with the board. Interact with the board as you prepare your slides. They are a sounding board for what you want to cover. Remember they have done this before and can only help when they know what problems you are trying to solve.

    • Leave Time for Governance: At the end of each board meeting, you will do the housekeeping: approve stock grants, minutes and other items that the board needs to vote on. Always have the most current cap table handy. That gives the board perspective on the impact on the employee option pool as they approve grants.

    • Hold a Dress Rehearsal: 24 hours before your board meeting, meet with your leadership team and do a dress rehearsal. It is important that everyone is on the same page. This might be the first board meeting for them as well.

    • Take a Breath: Congratulations on making it this far! Give yourself and your team the credit you deserve for the huge milestones of a Series A raise and first board meeting. There’s a vast amount of work ahead, but this is an achievement to celebrate.

    About Darren Kaplan

    Darren Kaplan is the co-founder and founding CEO of hiQ Labs (www.hiqlabs.com), a data science company, informed by public data sources, applied to human capital to make work better. Mr. Kaplan is an Alchemist Accelerator mentor, working with Augmented Reality, Cyber Security, and HR enterprise SaaS startups.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1296323 2018-06-28T14:55:33Z 2018-06-28T14:55:33Z Using Design to Inspire Disruptive Thinking

    Image result for design principles

    Emotion factors into customer experience, and as a result, into purchasing decisions. A customer’s experience isn’t just about features, it also includes how the product or experience makes them feel. It’s the moments of delight a customer encounters, and also the overall feeling they take away after interacting with your product.

    Great customer experience is why travelers opted for Virgin America when United and American Airlines offered more flights per day. The Virgin experience, and the brand’s unique personality was ultimately more appealing than other airlines’ “feature” set

    Investing in design to create an experience, rather than just a product and feature set, can be a key element of a company’s success.

    Design is empathetic

    Design can be seen as abstract concept. Robert Brummer, industrial designer and founder of SF-based design studio Ammunition has said: “Everyone is a designer.” What he means is that all of the people involved in bringing a product to life (the engineer, the manufacturer, the product manager...) need to be bought in to the design vision since they’re executing on different parts of this shared strategy.

    Empathy is critical for design success. When you understand the context of a product's use (and how the person using it feels), you make really important discoveries. Understanding your users doesn’t just mean interviewing them––observation can be even more revealing. Observations uncover insights that interviews may not because users will often tell you how a process is supposed to work, rather than show you how it actually works.

    To ensure that every decision reflects the best user experience, startups can keep these key principles in mind:

    Five Key Principles

    1. Make it simple – Find a way to make someone's life easier, and maintain your focus there. It takes discipline to keep things simple, but focusing on doing one key thing really well could be a differentiator.

    2. Inspire delight – Create efficiency around a pain point. Help users complete something in an engaging and compelling way.  

    3. Exhibit craftsmanship – Pay attention to details. Think about going to a Disney resort:you instantly become part of a crafted, well-orchestrated experience.

    4. Deliver unique value – Avoid getting trapped in incremental improvement. Be sure you're focused on doing something unique and different. The NEST thermostat is a great reminder that there are opportunities for  breakthrough innovation even for everyday household objects.

    5. Focus on human goals – Understand your customer's world. Take time to understand who your users are.Don't trust internal opinions only because your perspective may not reflect the greater population.

    A design-focused process

    Design-driven companies use collaborative teams to get to disruptive ideas faster. Product management, product marketing, and design  should work together from day one. Here’s an outline of a development process that puts your users first:

    • Discovery – Focus on your customer development work to uncover your users’ needs first.

    • Conceptual design – Use the data you discovered to ideate upon possibilities.

    • Detailed design – Narrow your scope. Sketching, wireframing and prototyping, and then sharing these prototypes can help you get specific and disrupt assumptions.

    • Implementation – Discuss tradeoffs and ensure that with every change you’re not compromising the overall experience.

    • Post ship – Go back and talk to your users again. You may find new opportunities for the next version.

    Find the right people

    For small companies unaccustomed to hiring designers (and other user experience professionals like researchers, prototypers, or writers), finding the right people can be challenging. Design is an iterative process, so whomever you hire should be willing and able to work with you through a development process, listen to feedback, and make changes.

    Communication is key. Your designer should be able to answer questions about why they made certain decisions, communicate to you why the overall design proposal works, and, as noted before, take constructive feedback. There’s lots of talented new grads and contractors who’d be motivated to work with startups and small companies. Working with a company where design is a priority at the earliest stages of growth should be an attractive prospect for designers. The benefits gained from designing an overall customer experience should prove invaluable to your business.

    About Catherine Courage

    Catherine serves as Vice President of Ads & Commerce User Experience at Google Inc. She was previously SVP of Customer Experience at Citrix Systems, Inc. where she led the company-wide customer experience initiative with responsibilities covering brand, social, web, product design, information experience and business process reinvention all to drive adoption and loyalty among customers, partners, and employees. She also served as SVP of Customer Experience of DocuSign, Inc. and the Founding Member of the experience team at Salesforce.com. She has twice been recognized by Silicon Valley Business Journal as one of 2011's 40 under 40 and 2013's Women of Influence. Ms. Courage holds a Masters of Applied Sciences, specializing in Human Factors, from the University of Toronto and Bachelor of Science from Memorial University of Newfoundland.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures/year. Learn more about applying today.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1295945 2018-06-21T13:48:16Z 2018-06-21T18:45:54Z Emotional Triggers and Investing

    Directors like James Cameron, James L. Brooks, and Steven Spielberg are masters when it comes to understanding human emotion. In just a few short scenes, they can leave a whole audience in tears. They aren’t doing anything magical. They’re just appealing to the same human emotions we all have. As an Alchemist Accelerator Partner, I teach founders how to apply the same principles to fundraising. Get an investor emotionally excited and investment comes naturally. Try to beat them to death with numbers and figures, and you’ll just spin your wheels. Investors see thousands of pitches a year and fund a handful. If you want to win, you have to get them excited and snap them out of their default behavior of “no.”

    Luckily for founders, investors are human too. So naturally, they have common emotional triggers that spark excitement, and ultimately, investment. In working with hundreds of founders, as well as raising $5.4million in seed funding for my own startup, I’ve identified eight emotional triggers nearly all investors respond to. By focusing on conveying these points to prospective investors, founders stand much better chances of raising capital and ultimately building great businesses.

    The eight emotional triggers are:

    • Big Market

    • Rapid Growth

    • Why Now?

    • Unfair Advantages

    • Founder Strength

    • Founder Bond

    • FOMO

    • Confidence

    Big Market

    Investors live and die by their returns. The only way to get big returns is to invest in companies that have potential for big exits. For most investors, big market is a fairly binary measure: “Is the TAM (total addressable market) large enough to get me outsized returns on my investment?” they’ll be thinking. If the TAM is over $2B, you’ll get a check and if it’s less than $2B, they’ll likely have to pass—even if they really like you. So make sure you help your investors know exactly how big your market is by helping them do the math. If an investor is asking questions about how many customers are in your space or how big you think the market is, don't make them guess at the answers. Give them all the data they need to help them understand the TAM. This is especially important if there's a general perception your market may be too small.

    Rapid Growth

    The only thing that separates a startup from a small business is rapid growth. It’s literally the definition of a startup. The easiest way to demonstrate a rapidly growing company is to, of course, be growing rapidly, which typically means you’re adding users, customers, or revenue quickly. However, if you’re pre-revenue or pre-launch, growth projections can also help to convince an investor that your business is about to take off. If you've done the work in Excel to know you're adopting the best business model, now is the time to use it to convince someone else.

    Why Now?

    The why now question is really a two-part question of movement. Why has this business never been possible until now? What has changed now to make this business possible for the first time? After all, fresh ideas are nearly impossible so chances are others have come before you and failed. You need to explain what has changed that will make your vision succeed. Market movement creates opportunity. You see it. They see it, but only you know how your business can best seize the opportunity to create billions more for the benefit of both of your organizations.

    Unfair Advantages

    Investors recognize there are lots of smart people in the world, so becoming a successful company in a crowded marketplace requires more than just efficient execution. Describe precisely how you're creating a new earnings engine as well as any unfair advantages you may have. For example, if you have extreme domain knowledge around analyzing very large datasets or have worked in the industry you're targeting with your new product (e.g., healthcare), you should highlight that in your pitch.

    Founder Strength

    Building any successful company is hard. Building a multi-billion dollar company is nearly impossibly hard. When investors invest in your business, they can’t just believe in your idea. They have to believe in YOU. The best way to convince them is to show them a history of exceptional achievements. For example, if you have a new security technology, are you already an inventor holding patents or do you have a CISSP? Name drop. Make connections to your market. Mention achievements and show off logos. Be sure to share all of your founding team strengths.

    Founder Bond

    Co-founder conflicts are among the top reasons startups fail. It’s not talked about every day on TechCrunch, but investors see it all the time in their portfolios. So when a potential investor asks, “How did you and your co-founder meet?” he or she actually doesn’t really care about your cute story of growing up together and your mutual admiration of Pokemon. What the investor really wants to know is if you and your co-founder are committed to each other enough to stick it out through the ups and the inevitable downs of startup life. Founders who have bonded because they've known each other awhile often have an edge because (presumably) their relationship has already weathered some turbulence.

    Fear of Missing Out (FOMO)

    In the public markets, investors pay big money for the privilege of investing in stocks at a future date, at a current known price. It’s called option trading and it’s a multi-billion dollar market in the U.S. alone. In the private market, investors get “free options” all day by telling founders simple things like “We’re still discussing things internally” or “We’re still working through diligence items.” As a founder, it’s your job to move these maybes to real answers. The best way to do this is by appealing to what we all fear, which is missing out on something that might be amazing.

    Confidence  

    Investors are looking for founders with confidence. After all, if you aren’t confident in your own business, why should the investor be confident in your ability to make it successful? One of my fundraising mentors, Michael Carter, used to remind me, “It’s your job to be confident.” That haunted me during my own fundraising process, but it also provided a healthy reminder that confidence isn’t an emotion. It’s something you can project through tone, body language, and deliberate actions—even if deep down inside you feel anything but confident.

    Emotion stays with us, making the discovery of the right human connection a significant factor in an evolving investment strategy. Talk. Uncover. Discover. Emotional triggers have the power to accelerate your funding success.


    About Michia Rohrssen

    Michia Rohrssen

    Michia Rohrssen is the CEO of Prodigy, the fastest growing auto startup. He is also a founder/blogger at B2BFounder.com, providing actionable insights from a founder in the trenches. Before Prodigy, he served as Head of Growth at VentureBeat and CEO of Smarter Solutions. Learn more at https://getprodigy.com.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1291462 2018-06-08T04:00:00Z 2018-06-07T14:50:33Z Crossing the Chasm and Spinning Up the Web

    Innovation has been difficult for traditionally successful companies. While leaders such as Intel, Oracle, and Microsoft spent time improving performance, entrepreneurial founders from Facebook, Google, and others moved in, creating new earnings engines by delivering faster and with less friction.

    When I speak with Alchemist Accelerator entrepreneurs, I first describe the hierarchy of powers because it's how investors think about the origins of future growth. They want to understand how your company is going to win based on what power it will exert on the market:

    • Category power - Growth from category expansion where secular growth increases spending

    • Company power - Growth from competitive advantage (e.g., the 800-pound gorilla analogy)

    • Market power - Growth born from customer commitment and loyalty (think: Mac owners of the 1990s)

    • Offer power - Growth born from unmatchable offers

    • Execution power - Growth born from reaching tipping points

    This last point -- reaching the tipping point -- is what founders delivering consumer technologies have to focus on just as business-to-business (b2b) startups have to put all of their energies into crossing the chasm. Each is a critical step to becoming a successful business or what accountants commonly refer to as a “going concern.”

    Crossing the Chasm

    When I introduced Crossing the Chasm in 1991, the idea of a technology adoption life cycle with different categories of enterprise technology buyers was novel. Now, most b2b founders recognize the value of aligning their businesses with innovators and early adopters (a.k.a. lighthouse customers).

    At the same time, they realize reaching beyond those groups to the early majority is much more demanding, and can sometimes feel like a futile exercise similar to poor Sisyphus pushing his boulder up the hill. Yet when they find pragmatists, or what I refer to as a "bowling alley" group of users that share similar pain points, the business can successfully cross the chasm to “viable” and enter the tornado phase, when it seems everyone--from techies to Main Street conservatives-- purchase. After all, adoption is social, so the skeptics come along too, and that's when you have total assimilation.

    Spinning Up the Web

    Interestingly b2c companies don't cross a chasm, but rather spin up a motor with a variety of gears to generate a tornado. Two gears -- acquisition and monetization -- were what early investors questioned most. How were companies running experiments and based on results, tweaking accordingly. However, the other two--engaging traffic and enlistment behavior--have turned out to be longer-term predictors of success. “Spinning up the web” or a mobile app today requires viral engagement. When Net Promoter scores reach 9 and 10, you know you have a winner.

    While not impossible, crossing the chasm or spinning up the web within a traditional business is hard because innovation can be distracting and require reassigning top talent. You, as an entrepreneur, can use their continued focus on performance to your advantage, executing on one of the framework powers to grow your business or be acquired by theirs. Getting traditional enterprises to effectively create new earnings engines is outlined in Zone to Win. For now though, startups like yours that can cross the chasm or spin up the web still have the edge.

    About Geoffrey Moore

    Geoffrey Moore is an author, speaker, and advisor who splits his consulting time between start-up companies in the Mohr Davidow and Wildcat Venture Partners portfolios and established high-tech enterprises, most recently including Salesforce, Microsoft, Intel, Box, Aruba, Cognizant, and Rackspace. Moore’s life’s work has focused on the market dynamics surrounding disruptive innovations. His first book, Crossing the Chasm, focuses on the challenges start-up companies face transitioning from early adopting to mainstream customers. It has sold more than a million copies, and its third edition has been revised such that the majority of its examples and case studies reference companies come to prominence from the past decade. Moore’s most recent work, Zone to Win, addresses the challenge large enterprises face when embracing disruptive innovations, even when it is in their best interests to do so. It’s time to stop explaining why they don’t and start explaining how they can. This has been the basis of much of his recent consulting.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1286848 2018-05-25T04:00:00Z 2018-06-06T20:18:59Z You Need Paying Customers, Not Free POCs, to Survive Your Fundraise

    First-time entrepreneurs that are building an enterprise SaaS company and trying to raise money without having paying customers will typically find it difficult to raise capital. As an Alchemist Accelerator CEO mentor, I help founders understand this point as early as possible. If you want to survive, meaning close your Angel or Series A round to live another day, you must prove that customers will pay for a solution to the problem you are solving. That is table stakes in Silicon Valley.

    Early Stage, SaaS, Enterprise Sales is Really, Really Difficult.

    You don’t have brand recognition, customer references, case studies, engaging slides, or a fully functional product. And most technical co-founders do not have sales experience and would prefer to spend their time coding versus updating salesforce or talking to people.

    Capital comes in two primary forms: paying customers and venture term sheets. Non-paying “proofs of concept” (POCs) are not customers. The Valley VC deal flow is massive so POCs with no path to revenue from small logos (companies with under 400 employees) will get a response that sounds like “come back in six months.” That is a major problem when you have only 90 days of cash and no salespeople.

    Founders need to clearly understand their prospects’ buying and decision-making processes. Everyone knows your product is in beta, but you shouldn’t be giving it away for free. Founders need to know their worth and show the value of their products. It’s important to explain to early prospects that free trials equate to no funding to hire engineers to scale the product. Even worse, they lead away from a path to raise money.

    Be honest with your first 10 potential customers. Let them know that you need a financial commitment from them and that they need to be a reference for potential investors. Listen carefully to their feedback when you make that ask. Do they have a budget to pilot new technologies? What are the barriers to your deal getting signed in the current quarter? Are they in the midst of a reorganization? Did a new boss just arrive? The signal will be high on your first call as to whether or not this lead has real potential. If a prospect tells you his or her company’s security assessment will take six months and the purchasing process another three months, believe that person and say thank you, don’t forecast them and then move to the next deal.

    Your First 10 Logos Matter

    Many founders sell into small businesses (20 – 400 employees) because they think the process will be easier. Logos matter and the first customers you attract are important. VCs call these lighthouse customers. They represent early market validation and big budgets. If investors have never heard of the logos on your traction slide, there’s little excitement to listen to your pitch. Similarly, if your first four customers are due to your friends or family network, investors will be

    skeptical of your ability to cold call and introduce your new product/service in a compelling way outside of your immediate contacts. Remember VCs backchannel before they cut checks. They call their networks of lighthouse executives to get a sense of market needs.

    Have A Path to Scale Early Customers

    Investors will be interested in your traction. They know that your first few deals will be priced below market to get the relationship started. But you need to show them a path—how you are going to grow early customers from five-figure deals to six-figure deals. (In effect, showing now that you won your first deal to prove your value with one business line, how you will get the rest of the business.) Great founders set this path to scale at the earliest stage of deal. They do this by value setting at the beginning of the relationship.

    So take the time to build a solid pipeline of customers not POCs. It’s easier to raise money when you have paying customers. Founders selling early-stage enterprise SaaS solutions should think in these terms: every $50K SaaS sales order should equal $300K in funding. If what you are selling has value, people will pay for it.

    About Darren Kaplan

    Darren Kaplan is the co-founder and founding CEO of hiQ Labs (www.hiqlabs.com), a data science company, informed by public data sources, applied to human capital to make work better. Mr. Kaplan is an Alchemist Accelerator mentor, working with Augmented Reality, Cyber Security, and HR enterprise SaaS startups.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1281987 2018-05-17T15:29:12Z 2018-05-17T16:00:01Z Lighthouse Customers: Four Best Practices


    A lighthouse is a great metaphor, symbolizing safe passage ahead. Throughout my career, I've associated it with really important customers because they're the ones that help safely navigate small startups into burgeoning businesses.

    Lighthouse customers are similar to anchor tenants in a shopping center. Others follow their lead. Lighthouse customers are your company’s champions (and hopefully become members of your Advisory Council). Lighthouse customers support your vision and have tremendous influence on your product or service roadmap because they've committed to you and you've committed to them. You’ll have other customers, for sure, but these lighthouse accounts are the shining examples of your software and service in action. They’ll be your references to investors. They’ll speak to analysts and press. They are your showcases.

    That said, they don’t all have to be from the same industry. However, they do have to share the pain points your business is solving.

    When it comes to lighthouse accounts, here are four things I tell the Alchemist Accelerator startups that I mentor to keep in mind:

    1.     You're forming a partnership that requires commitment on both sides.

    2.     Find big names that can be “company makers.”

    3.     A solid ‘how many’ rule of thumb is 1:1.

    4.     Companies do change.

    Both Sides Commit to the Partnership

    In the era of subscription selling, it's more important than ever for you to have happy and satisfied customers. Lighthouse accounts provide an inside view into what prospects and customers really need and what your organization is doing (and can do better) to deliver.

    For your part, your company will need to provide direct access to your CEO as well as establish a dedicated support team. Best practices with lighthouse customers include

    ·      Monthly check-ins between executives

    ·      Quarterly in-person, on-site meetings at either the customer or company location

    ·      Bi-monthly meetings with clearly defined action items by team

    ·      Weekly internal email updates about lighthouse customer progress

    Recognizing the importance of these key accounts, some startups showcase lighthouse customer logos on their walls. Others host lunch & learns about the customers' businesses, hearing from champions, investors, influencers, and even media presenters.

    But the relationship can’t be one-sided.

    Lighthouses have to commit, too, meaning they should allocate executive access and provide significant input to your roadmap, but without too many absolute demands. There’s also financial equitability. Lighthouse accounts should pay for what they use, with the exception of possible discounting in exchange for specific marketing activities, such as quotes in press releases or speaking engagements at industry events. Remember, our companies charge customers for our software and services because nothing should be free when you’re providing a valuable service or product.

    Find Big Names that Can Be “Company Makers”

    Lighthouse customers should be well-recognized brands. It may not be widely known, but forward-looking companies across industries -- think Starbucks and Target, VISA and Mastercard, JPMorgan Chase and PNC, for example -- want to work with you as much as you want to work with them. Global giants stay ahead of competitors by finding ways and new technologies that improve processes, increase customer engagement, drive revenue, and reduce costs. If you have something that can give them an edge, they’re interested.

    Association with a few big brands puts a company on the map. Lighthouse accounts not only open doors, they offer tremendous opportunities for the kind of high-scale growth that can make a company wildly successful. Teaming with the right internal champion can turn an initial 50-seat sale into an enterprise-wide deal.

    1:1 is the Ideal Executive Ratio

    Too many and there's no way to support them. Too few and you don't have enough feedback to improve your product/service nor investor references to continue building. Lighthouse accounts should be the best example use cases of your software or service, making them the most strategic to your company. That’s why each lighthouse account must have a company executive sponsor, leading the relationship to greater success. The ideal ratio for lighthouse accounts is one executive from your company to each lighthouse customer organization. That basically means if you have five execs in your company including the CEO, you can handle five total lighthouse accounts.

    Embrace Change

    It doesn't have to be the end of either business if a lighthouse customer relationship dwindles. Change is constant. Some companies advance faster than others and timing is everything. Should the bright light of one customer begin to fade, be sure to replace it with another. This goes for both startups and global Fortune 100 companies. There should never be a time when employees don't know the name of your company's lighthouse customers.

    Lighthouse accounts help companies of all sizes, across industries, safely navigate forward. They keep teams innovative and competitive. Who are your company's lighthouse customers? It's important for you and everyone else in your business to know.

    About Kris Duggan

    Kris Duggan is an entrepreneur, advisor, investor, and educator. He's advised and invested in a variety of Silicon Valley-based companies, including Palantir Technologies, RelateIQ (acquired by Salesforce.com), Addepar, Blend Labs, Turo, and Gusto. He co-founded and was the founding CEO of Badgeville and BetterWorks before co-founding a new technology company, based in Palo Alto, CA, this year. Kris is the Chief Sales Mentor at the Alchemist Accelerator. He previously served as an Adjunct Faculty for Singularity University, and is a frequent speaker on the topics of scaling startups, customer loyalty, gamification, employee engagement, and performance management.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1282723 2018-05-12T07:04:46Z 2018-05-31T20:18:42Z What’s HQ (Hustle Quotient) And Do You Have Enough Of It?

    Hustle isn’t just the difference between good and great: for start-ups, it’s the difference between existence and non-existence, between “good enough” and “gone”. Companies in an industry will experience roughly the same degree of luck. Hustle is what makes the most out of good luck and sidesteps and perseveres through the worst luck. HQ, your Hustle Quotient, is how effectively you leverage your IQ and EQ. Hustle is a resource available to all, and this article explains 6 ways to increase your startup’s HQ. The article also explains the interaction of HQ with social, financial and human capital; and in what way HQ supports anti-fragile companies. Concepts are illustrated via examples from history and industry.

    In my experience, one factor — a factor available to anyone — opens the door to success for startups: Hustle — the difference between existence and non-existence. Hustle has to be your guiding compass.

    Your organization’s HQ, its Hustle Quotient, measures your perseverance and resourcefulness. HQ is how effectively you leverage your IQ and EQ.

    It’s not new. Here’s a life-and-death example of HQ outside the realm of this century’s technology startups.  More than 100 years ago Amundsen and Scott led two separate expeditions in a race to be the first to reach the South Pole. Presumably, their goal was to also return from the expedition.  Amundsen reached the pole first, and he returned with every member of his expedition. Scott and his entire team perished and likely did not reach their goal. The difference in outcome — existence vs. non-existence — boils down to hustle.

    Amundsen insisted on 20 miles a day, no matter the conditions, and he never went more that 20 even in great conditions. Scott rested on bad days and covered as much ground as possible on good days. Both teams had roughly the same conditions, but their outcomes were vastly different. Amundsen covered twice as much ground — returning from the expedition. Existence vs. non-existence.

    Amundsen had broad contingency plans — literally. He carried three times the supplies that he calculated were needed, and he marked the caches with a 10km band of flags so he wouldn’t miss them. Scott carried the exact amount needed, and planted a single flag for each. Amundsen’s team was fed; Scott’s experienced starvation. Existence vs. non-existence.

    Amundsen researched how the Inuit lived in order to understand the problems he would encounter. Scott knew how to use horses, so he used horses—which were not able to survive the conditions.

    Three HQ lessons from these expeditions:

    1. Persevere through periods of bad conditions
    2. Contingency plans enable you to persevere
    3. Understand the problems before you choose your solution

    A start-up adventure has striking similarities to the Antarctic expeditions, though not that fatal consequences of failure. There are many unknowns, but a bright north star: becoming a billion-dollar company. Startup companies have, on average, similar resources and luck. Hustle is what you make of the good luck, and how you persevere during the bad. Contingency planning gives you the backup you need to survive when the goal takes so much longer to reach than you expected, to endure during the bad luck, and as you navigate the unknowns. In a startup, you can’t dream in a vacuum — you have to address how to solve a real problem. Just as Amundsen created solutions correct for Antarctic conditions, startups must understand the market needs, headwinds, and pinpoints. Outcomes are also similar: existence or non-existence.

    Here’s a Hustle example from the technology world: Imagine Larry Page steps on the elevator with you. You could be immediately star-struck and ask for an autograph, while expressing admiration for his accomplishments. Or you could engage him in a conversation that shows off your chops: “BTW I was at the GoogleNext conference last month, and it brought home to me that Google is really giving AWS a run for the money.” Larry is now compelled to say, politely, “Oh, thanks. So, what is it you do (that brought you to the conference)?” You use your HQ to deliver an answer gets his interest, and he agrees to connect with you. Now, although you don’t have an autograph, you do have potential to establish a relationship with Google. This IQ leveraged by hustle.

    Anyone and any organization can have hustle. It is a renewable resource with no marginal cost.

    So how do you get that hustle, or evaluate your HQ?

    1. Force yourself into uncomfortable situations, outside your comfort zone. Such as promoting your company even when it feels unbearably awkward.
    2. Work on things that truly move the company forward. For example, making 20 prospect calls. You’ll probably have to be uncomfortable — overcoming the feeling of failure that prospecting often brings, which is really overcoming yourself.
    3. Hire people with high HQ. Make HQ central to the interview. What have you done outside your comfort zone, or that’s risky, or leaps into the unknown. You must hire the hustle mindset and behavior, not the job skill set.
    4. Create a culture of tinkering. The route to success is faster if you try over and over, experimenting and learning until you find solutions.
    5. Create options where none exist. If you are prospecting, and get no response, what do you do? High HQ  people brainstorm on how to get a response. Who else could reach my prospect? How can I get near my prospect? How can I create more prospects?
    6. Do not accept binary outcomes. You reached your prospect and delivered your most persuasive arguments, yet you got turned down. Don’t react as if the outcome is Yes or No. You got a No to your offer, so now you ask  “What happened? Why not? What would have led to Yes? Who do you know who might want to use us?” Answers to any of those questions put you far ahead of where you were after No.   

    High HQ teams make more of their startup capital. Startup capital is the combination of your social, human, and financial capitals. Financial capital is your buffer for hard times. Human capital is the skills and experience you collectively have. And social capital is your network in the industry you are in. Hustle makes you assess what you can do with your capital. How many people in cloud computing do you know, or how many people in your network know people in cloud computing? What are the gaps in your network? How will you fill those in? Our human world operates within clans or tribes. Hustle is identifying groups that are critical to your success, making sure you invest time and energy in becoming an integral part of them and using them effectively.

    As you apply your elevated HQ to your organization, keep your scope broad. Company building is not product building. Product is only one of the variables to manage. The others include finance, advisors, investors, co-founders, talent customers, legal, HR, and partners. Some of these you can select based on their HQ. Some, like co-founders, advisors, and partners, will complement what you do, filling in for your organization’s gaps. It’s all about existence or non-existence.

    This manifesto is a result of my constant research into what drives success.  I’ll share my reading list with anyone who reaches out to me.

    About Asim Razzaq

    Asim Razzaq is the co-founder and CEO of YotaScale. Prior to YotaScale, Asim was Senior Director of Engineering at PayPal and eBay. He built and ran the PayPal cloud infrastructure and his engineering teams made significant innovations in the area of manageability and system administration. He helped build the PayPal Developer Platform from zero to a billion dollars in payments volume. Asim was also responsible for all core infrastructure at PayPal processing 5 million transactions per day. He has lead engineering for multiple early and late stage startups in Silicon Valley and Austin with two of the companies exiting to Netsuite and Navitaire. 

    Asim co-founded YotaScale to bring his expertise in large scale, mission-critical, cloud infrastructure management to companies beginning to use cloud services as well as those that are well on their way.

    Asim holds a BS (Honors) degree in computer science from the University of Texas at Austin where he conducted research in distributed computing and large scale infrastructure sponsored by IBM Research. He is a published author in the field of computer science in the area of resource management for large scale, distributed systems.

    About the Alchemist Accelerator

    Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

    ]]>
    Alchemist Accelerator
    tag:blog.alchemistaccelerator.com,2013:Post/1281660 2018-05-10T14:53:56Z 2018-05-10T16:00:03Z Demo Day Advice - From a VC Turned Entrepreneur

    Entrepreneurs - congratulations on approaching Demo Day!  You'll soon be surrounded by interesting people, inundated by emails, and distracted by countless potential conversations that you'll need to prioritize carefully.  Based on several years of experience and more than a handful of “Demo Days”, including the Alchemist Accelerator’s, here are a couple of tips I hope you’ll find useful:

    1)  Remember that 5 Minute Demo Day presentations are NOT enough time for listeners to decide whether to invest or not.  Your goal for the Demo Day presentations, therefore, is to attract the attention and trigger the NEXT CONVERSATIONS with the individuals in the audience that could be the best sources of feedback / investment ($) / advice / or customer introductions.

    • Sometimes all of these dimensions happen at once, usually feedback and "advice" happens first as a precursor to investment or introductions.
    • None of these dimensions, however, will happen if the listener (for whatever reason) decides they are not interested in having a follow-up conversation.
    • If you think someone or some firm could be a good fit for you, then be proactive in getting their attention.

    2)  The demo day presentations are only 5 minutes, if not shorter!  The short format requires you to present in "broad brush strokes" that capture the most important highlights.  Prioritize what content to present and what details to highlight most efficiently.

    • Sometimes the slides you create for "full" 30/60 minute conversations with investors are good ones to reuse.  More frequently, it helps to edit and consolidate top-level takeaways or "aha moments".
    • Pay special attention to feedback from listeners who are hearing your pitches for the first time, domain experts who know your space, and non-experts who don’t know your space.  Each of them will give you different types of feedback, and you'll need to decide who to optimize for carefully.

    3)  From my experience as a VC and angel investor, the most important questions to address within an abbreviated Demo Day pitch to trigger follow-ups from the right prospective investors are as follows:  
    a.  Why now?

    • Compelling answers to this usually involve something significant changing in the market, with new/different customers or pain points that are growing, or new technology breakthroughs enabling problems to be solved, or something else encouraging different behaviors (such as government regulation or customer psychology).  
    • All of you are smart and talented.  Articulate (in simple terms to someone who is not an expert in your field) why you are excited and passionate enough to be dedicating your life to your companies right now.

    b.  Why you?

    • The big opportunities and major inflection points across industries will be discovered by several, (usually many) different teams. What makes your insights unique or authentic?  
    • What experience or exposure do you have to the domain?  Have you or your co-founders been entrepreneurs before, or have you had other exceptional experiences in your life that will make you succeed when others give up?

    c.  Target Market.

    • What subset of the market and subset of customers are you going to start targeting first, and how big can that "slice of the pie" get as you grow your product / team / business?  
    • Most VC's focus and talk about Billion dollar markets because its difficult to build large businesses in small markets, but it's rare that new products and new companies can target actual Billion dollar markets from the start.  Usually, whether limited by feature set, market awareness, or geography, most startups have to start by focusing on small pieces of big markets to grow into bigger markets and bigger companies.
    • I prefer to see a tighter focus and deeper understanding of smaller markets as precursors to bigger / quickly expanding markets rather than claims to HUGE markets that are crowded with competition or demonstrate lack of focus or deep understanding of target customers.

      d.  Product (or service). What are you building, creating, or enabling?

      • A single sentence that clearly articulates (again in simple terms that someone who is not an expert in your field can understand) is best.  That single sentence will keep evolving, and it will require more detail when you explain it to people with domain expertise. Even so, you should aim to distill the core trajectory of your company into to a single sentence that can be remembered.
      • What signs of customer validation, or market adoption, or business potential do you have?

      e.  Differentiation. What is defensible now and into the future?

      • What is the strategy for expanding, and what will become the more UNIQUE and compelling dimensions to your product offering vs. inevitable competition?
      • Are you 2x better or 10x better than the alternatives? Across what dimensions and subject to what assumptions?

      e.  Business Model.

      • At the seed stage you don’t need to have the world’s most comprehensive business model, nor a combination of 3 different business models.  You do, however, need to have some ideas on how you might start to capture the value or benefits that you provide.
      • Again, what signs of customer validation or business potential do you see? Deep understanding of how much customers are paying for alternatives, or inferior solutions, or notable competitors in the market are good proxies.

      Overall, strong Demo Day presentations usually weigh heavily towards addressing <Why now> + <Why you> + <Target Market>, with lighter treatments of <Product> + <Differentiation> + <Business Model> (due to time constraints).  Follow-up conversations, and deeper diligence from potential investors will go deeper into the areas of <Why you> + <Product> + <Differentiation> + <Business Model>.
      You can identify individuals/VCs who are a better "fit" for you on the basis of how well they already understand <Why now> + <Target Market>, and how deep they can dive into discussing the other areas. Individuals/VCs who don’t already share your opinions regarding the <Why now> and who don’t ask thoughtful questions about the other areas are usually dead ends, or will require a lot of time to be convinced.
      4) Have fun and stay positive!  Prioritize your time and scheduling of follow-up conversations!  The Demo Day pitches and many conversations that will follow are a unique and special time for you as entrepreneurs.  Build relationships, follow-up with the most relevant potential sources of advice or funding. Don’t let the many NOs and frequent radio silences you will encounter discourage you from progressing up the paths you are on.  You are privileged to see opportunities where others are blind, and courageous to climb routes that others are too scared to explore.

      Onwards!
      About Luis Robles

      Startup advisor & Angel Investor, Blockchain enthusiast, Experienced Company Builder & VC Investor (previously @ Sequoia Capital). Co-Founder, VP Products & Marketing at Diamanti. Knowledgeable about enterprise businesses, datacenter infrastructure, cloud computing, distributed + open source software, big data, IOT. Senior Product Manager and early engineer at VMware. BS and MS degrees in Computer Science from Stanford + an MBA from Harvard.
      About the Alchemist Accelerator
      Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

      ]]>
      Alchemist Accelerator
      tag:blog.alchemistaccelerator.com,2013:Post/1277219 2018-04-26T16:07:43Z 2018-05-04T20:17:22Z Customer Advisor Board: Early-Stage Hack to Getting Your First Customers

      As a founder and former CEO, I'm delighted to see so many Alchemist Accelerator portfolio startups executing highly engaged Advisor Councils (AdCos) when acquiring their first 10 paying customers. Yet most startups fall short of scaling their AdCos beyond a few influencers and MVPs. This is a critical mistake.  

      Active AdCos drive you to deliver more customer-focused products while creating momentum in the form of champions, stakeholders, thought leaders, communities, and loyal customers. Think of your AdCo as part of your startup's secret sauce, helping you scale quickly from Council (10-50 people) to Community (50-100 people) to User Conference (100+ people).

      As you embark on your customer development journey, an AdCo can serve as an enticing carrot to attract smart and talented individuals with the pain points you've outlined. Joining an AdCo comes with personal and professional perks—from new skills development to high-quality peer networking. Those joining AdCos recognize these benefits, but they'll become your first customers for two additional reasons: first, they really want the product you're working hard to deliver, and second, they want to help you succeed (and have funding to budget to do it).

      Qualifying early AdCo members is important. You want individuals that are

      • Thought leaders with deep experience and knowledge about the problem you are working to solve

      • Open and willing to co-build a solution with you

      • Able to access budget and have decision-making authority to buy

      Prioritize Your AdCo

      There are benefits across the business to establishing and scaling your AdCo:

      1. Product: Ongoing customer-focused product feedback

      2. Sales: Demand Gen (SQLs) of qualified leads and referrals

      3. Fundraising: Venture capital (VC) due diligence during your current or next round

      Product: Build WITH Customers Not FOR Customers

      AdCos instill a customer-first mindset while providing a critical product feedback loop. Product decisions and team scrum/sprints shift from sharing “I think” to “they said, they want, and they need” inputs.

      Data and insights from your AdCo need to be meticulously recorded and then shared “in their words.” At hiQ, we always found the devil was in the details. You should plan for your AdCo members to spend a full day alongside your engineers, data scientists, and product team members in structured round tables, breakout sessions, and panels.  

      Power tip: Host your AdCo meeting at a Council member’s location. Enterprise companies have conference rooms that can seat more than 20 people, and often, the organization will provide the drinks and snacks.

      Sales: Advisors Become Champions, Then Customers

      Your AdCo is one of the tools in your demand-gen and pre-product sales arsenals, and a measurable outcome of establishing one. AdCo members need to be in your sales pipeline as they move from Advisor to Champion to Customer to Reference and Referral. You'll be able to quickly qualify which Advisors will become champions and customers. They're the ones that will write the internal business use case for budget approval because they can’t live without the product(s) you are building. They'll be the ones standing on stage next to you when you officially launch.

      Power tip: Use a pending AdCo meeting to close a late-stage deal. Prospects enjoy talking with customers before they sign, so have them sit next to each other.

      Fundraising: The Best 2 Hours VCs Spend on Due Diligence

      AdCos will scale with your customer growth, and VCs will notice. VCs think in terms of product market fit. This is validated when they walk into a packed ballroom full of clients, prospects, analysts, and job applicants—all wanting to be part of what you're building. There's no better and bigger moment for you and your employees then having customers on a main-stage talking about your product and how it saves them millions of dollars.

      Power tip: Invite VCs to Council meetings as soon as possible. Their calendars book up a few weeks out.   

      About Darren Grant Kaplan

      Darren Kaplan is the co-founder and founding CEO of hiQ Labs (www.hiqlabs.com), a data science company, informed by public data sources, applied to human capital to make work better. Mr. Kaplan is an Alchemist Accelerator mentor, working with Augmented Reality, Cyber Security, and HR enterprise SaaS startups.

      About the Alchemist Accelerator

      Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley—including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.

      ]]>
      Alchemist Accelerator